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Oceanic Aquisition: Combined Entity takes Top Two Position – ETI

By on September 17, 2011

Ecobank  Transnational Incorporated (ETI) has announced further details  regarding the acquisition of Oceanic Bank Plc.
ETI which signed a Transaction Implementation Agreement in relation to the acquisition and recapitalisation of Oceanic Bank said that the business combination would lead to the creation of a leading distribution network across all states in Nigeria with over 600 branches and 1,450 ATMs.

It said that achieving ETI’s strategic goal of increasing market shares in Nigeria, the combined entity would  be Top 5 (by assets), Top 4 (by deposits) and Top 2 (by branch network), adding that the proposed partnership would provide ETI with an exposure to Nigeria that better reflects the size of Nigeria’s economy relative to other African markets .

ETI said that significant synergies are expected through leveraging economies of scale in procurement, infrastructure and funding costs.

Speaking on the bank’s acquisition, Arnold Ekpe, group chief executive officer said that, “Oceanic Bank is highly complementary with our business ,and growth strategy in Nigeria.  The Transaction creates the second largest distribution platform in Nigeria with over 600 branches and 1,450 ATMs.”

He stated that by combining Oceanic Bank’s retail customer base and strong public sector franchise with Ecobank’s multinational and local corporate clients, the bank will create a leading full service financial institution and consolidate Ecobank’sposition as a market leader in Nigeria.”

Mr Ekpe, further said, “I am confident that the proposed acquisition will create significant shareholder value.  I invite the shareholders of Oceanic Bank to participate in the exciting future of the leading independent pan-African banking group with a combined total of over 7.4 million customers and a presence in 32 African countries.”

The bank however pointed out that acquisition will be executed through a scheme of arrangement while noting that
AMCON would invest a Financial Accommodation Amount (FAA) to restore the net asset value of Oceanic Bank to zero and in exchange, be issued ordinary shares of Oceanic Bank through a private placement.

It stated that following the injection of the FAA, ETI will acquire 100 per cent of the outstanding ordinary share capital of Oceanic Bank. The bank also said that consideration for 100 per cent of Oceanic Bank will be by way of a mixture of new ETIordinary shares and new ETI preference shares.

It stated futher also that ETI has conducted extensive due diligence in relation to the acquisition and is confident that it is in the best interest of all parties.  ETI also said that it has extensive acquisition experience, having completed 12 acquisitions in 10 countries across Africa over the last 10 years, including three in Nigeria, which underscores its ability to seamlessly integrate Oceanic Bank into the ETI network, fully realising expected synergies.

The CBN has  recently granted Oceanic Bank and ETI its “No Objection” approval to enter into the scheme of arrangement. The Scheme of Arrangement has also received the SEC’s approval-in-principle.  A general meeting of Oceanic Bank shareholders has been called for 27 Septembers, 2011. to approve the scheme of arrangement.  Following shareholder approval, the Acquisition is expected to be completed by 5 October, 2011.

It said that the proposed recapitalization and restructuring would be subject to regulatory and shareholder approvals.  While the process will commence immediately. Following the acquisition, it is expected to take up to three years to fully integrate the businesses.

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