Today, I received many questions from entrepreneurs and businesspeople asking what happened on Diamond Bank which announced that Access Bank had acquired (yes, “merger” with) it. It was HARD news because many fellow citizens would possibly see dislocations in their careers. I spent time thinking about a business card an auto shop mechanic gave me last week when I visited to change car oil: McKenzie’s – since 1957.

The Board of Diamond Bank Plc (“Diamond Bank”) today announces that following a strategic review leading to a competitive process, the Board has selected Access Bank Plc (“Access Bank”) as the preferred bidder with respect to a potential merger of the two banks (“the merger”) that will create Nigeria and Africa’s largest retail bank by customers.

The Board of Diamond Bank believes that the merger is in the best interest of all stakeholders including, employees, customers, depositors and shareholders and has agreed to recommend the offer to Diamond Bank’s shareholders. Completion of the merger is subject to certain shareholder and regulatory approvals.

The proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger. Based on the agreement reached by the Boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and the allotment of 2 New Access Bank ordinary shares for every 7 Diamond Bank ordinary shares held as at the Implementation Date. The offer represents a premium of 260% to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange (“NSE”) as of December 13, 2018, the date of the final binding offer.

Immediately following completion of the merger, Diamond Bank would be absorbed into Access Bank and it will cease to exist under Nigerian law. The current listing of Diamond Bank’s shares on the NSE and the listing of Diamond Bank’s global depositary receipts on the London Stock Exchange will be canceled, upon the merger becoming effective.

Diamond Bank expects the transaction to complete in the first half of 2019.

Uzoma Dozie, the Chief Executive Officer of Diamond Bank, said: “The proposed combination with Access Bank will create one of Africa’s leading financial institutions.  There is a clear strategic rationale for the proposed merger and strong complementarities between the two institutions. While Diamond Bank has pioneered Nigeria’s largest technology-led retail banking platform, Access Bank is one of Nigeria’s leading full-service commercial banks. Consolidation in the Nigerian banking industry is an inevitable, natural progression in a sector where the gap between Tier 1 and Tier 2 banks has been widening and scale has become critical; where technology will disrupt the traditional business model while enabling broader financial inclusion. 

The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses and will create a financial institution with the scale, strength, and expertise to capitalise on the significant opportunities in Nigeria and sub-Saharan Africa more broadly.”

Herbert Wigwe, CEO of Access Bank, said: “Access Bank has a strong track record of acquisition and integration and has a clear growth strategy. Access Bank and Diamond Bank have complementary operations and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion. Access Bank has a strong financial profile with attractive returns and a robust capital position with 20.1% CAR as at 30 September 2018. We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion, and sustainability, can bring benefits to Access Bank and Diamond Bank customers, staff and shareholders.”
Exotix Capital acted as international financial advisor to Diamond Bank, and Templars acted as Nigerian legal counsel.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU 596/2014) (“MAR”) and is disclosed in accordance with Diamond Bank’s obligations under Article 17 of MAR.

Yes, a mechanic oil change shop was founded in 1957 in America and it is still operating. But in Nigeria, our companies rarely pass the 40^th birthday. For every First Bank, hundreds did not see the 40^th year. And if you remove the foreign-anchored companies in Nigeria, we may not have more than 25 companies with revenue of $5m that are above 40 years. Remember, Dangote, GTBank, Innoson Motors, and many more are not there yet. In short, if you sort companies by “40th birthday” in the Nigerian Stock Exchange, and carefully remove entities with international origins, you may struggle for two dozens.

No matter how you see it – our problems are NO MORE building startups but keeping old companies alive. This is not really about creative destruction. This is a systemic problem in Nigeria.  It is very important that government begins to look at this paralysis with the same high voltage searchlights they are beaming for seeding  startups.

If the problems are regulations, we need to find out. If the problems are that our accountants, business leaders, and others in the ecosystems are sleeping on their jobs, Nigeria needs answers. I do not think it makes sense to invest millions of dollars to create companies and they just die!

We need to be unhappy that many companies are dying in a growth market like Nigeria. Our business and political leaders have jobs to do: we cannot transmute with these failures into the next level as a nation.

Comment  on LinkedIn Feed

The problem is fundamental, unfortunately many people do not see beyond their noses. Have we wondered why the Missionaries that brought western education to us were building churches and schools closely? Because you first need to be HUMAN, before becoming a professional or anything else.

Having ten degrees and certifications does not stop anyone from being fraudulent, unethical or suffering moral crisis; these are the real issues. Skills don’t equate nobility. We have wasted so much time sending people to school, without building their minds and training the souls; so we end up having ‘educated’ monsters and people with contrived and warped minds.

Great businesses aren’t built by setting out to amass fortune; rip people off; game the system whenever you have an inch; we must focus on producing humans who are humane, we are greatly lacking in this department.

We have a beautiful phrase known as ‘Corporate Governance’, but the unfortunate thing is that both the players and regulators are suffering from the same moral crisis, so it becomes extremely difficult to ask anyone to lead the charge.

Our values are questionable and dubious, to build durable companies or stop the demise of the existing ones; this is where to start.

Bloomberg and local news have reported that Access Bank had acquired Diamond Bank in Nigeria. It is a very painful one, personally, because Diamond Bank seeded my career. As I have written, it was the only company I ever-interviewed in Nigeria, and the only one I sought employment: other jobs had come without applications or interviews. With a category-king leading innovative spirit, Diamond Bank was a peerless institution at its peak. It pioneered Nigeria’s modern banking with the best banking product ever in Nigerian history. Yes, the Diamond Integrated Banking System (DIBS) transformed Nigeria and solved the menace of armed robbery against traders than all the contributions of Nigerian Police. Yet, the Diamond lost the sparkle.

Nigeria’s Access Bank Plc agreed to take over struggling local rival Diamond Bank Plc in a deal worth about $200 million that would create the nation’s biggest lender by assets. Both companies’ shares rose.

Access will buy Diamond for 3.13 naira a share, with almost a third of that, or about $64 million, being paid for in cash and the rest in shares, the Lagos-based lenders said in statements to the Nigerian stock exchange on Monday. That’s more than triple Diamond’s previous closing price.

Carlyle Group, the U.S. private-equity firm, bought almost one-fifth of Diamond in 2014, its first-ever Nigerian deal. Since then, the value of the stake has tanked amid an economic slowdown in the oil-driven economy that sent bad loans soaring. The lender was downgraded by both Moody’s Investors Service and S&P Global Ratings last month to triple-C.

“The merger will be a positive for Access Bank,” Lagos-based CSL Research said in a note to clients. “Diamond Bank has a strong retail franchise, especially on the liability side, giving it the lowest funding cost among peers.”

I cannot write much because I am biased on this topic. I am not sure that I can be fair and balanced here. Yes, when a company funded your degrees and extended that favor when you had left, it is evident any commentary here would not be based on reality. But get this from me – I truly know that I am a small boy. Had I been super-rich, I would have sent a cheque of $200m (the amount Access Bank is paying) to keep Diamond Bank alive. But this goes beyond Diamond: can Nigeria build durable companies?

In a cocktail few years ago, I had the privilege of speaking before global business leaders. My business mentor, Tony Elumelu, who continues to support, gave me that opportunity. After I finished my oration that evening, a lady came to me. She was Lady de Rothschild, the chief executive officer of E.L. Rothschild, a leading independent wealth management firm in the United States with real estate, agricultural and food interests. She gave me her card and asked me to write her. But while we were talking, she dropped a sentence: her family business had celebrated its 200th year of operation! Yes, the company was founded in 1811 and is still operating in many incarnations today.

This is a national business tragedy!