Access Bank rises most in 3 months on Diamond merger close
Access Bank plc, a Nigerian Tier-one lender, gained the most in three months following a successful merger with Diamond Bank.
Access Bank rose 9.24 percent to N6.50 at the close of trading on the Nigerian Stock Exchange (NSE) Wednesday, its biggest rise since December 17 when it formally announced the commencement of the merger.
The merger between the two lenders is expected to produce Africa’s largest retail bank by customer base.
Both Access and Diamond Bank on Tuesday formally completed the merger deal after obtaining a court sanction of the deal and approval from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC), with shares of Diamond Bank placed on full suspension by the local bourse.
“Diamond Bank Plc hereby confirms that shares of the bank were placed on full suspension today, March 20, 2019,” the mid-tier bank said in a notice to investing public. “The full suspension will enable the bank determine the shareholders that will be entitled to receive the scheme consideration,” the statement added.
The bargain hunting is seen as investors’ renewed appetite for the tier-one lender having achieved a seamless merger process and ahead of the acquisition of the entire issued share capital of Diamond Bank in exchange for N1 per Diamond share and 2 new Access Bank’s shares for every 7 held by Diamond Bank’s shareholders.
“Investors are re-pricing Access Bank on the back of the merger,” Gbolahan Ologunro, an equity research analyst at CSL Stockbrokers, told BusinessDay by phone Wednesday.
The suspension prompted investors willing to buy Diamond Bank’s stock to shift their interests to Access Bank in anticipation for better earnings since the tier-two lender was no longer available, according to Ologunro.
In the 2018 financial year, Access Bank grew gross earnings by 15 percent to N528.75 billion from N459.08 billion garnered in 2017, while after-tax profit rose 58 percent to N94.98 billion from N60.09 billion posted in the previous year.