The Securities and Exchange Commission (SEC) was yesterday notified of the proposed merger between Access Bank Plc and Diamond Bank Plc, confirming an exclusively story reported by The Nation.

The apex capital market regulator, however, clarified that the banks have not submitted formal application for merger, which will form the basis of regulatory approval.

“The SEC received on Monday, Dec 17 2018, notice of intention by Diamond Bank and Access Bank to merge. The Commission is currently waiting for their formal application,” SEC stated.

Under extant rules, mergers and acquisitions must be approved by SEC to kick-start the formal process of the transaction, following which the parties will approach the Federal High Court for an order to hold an extraordinary general meeting of their shareholders for their approvals. The Nigerian Stock Exchange (NSE) will also have to approve the merger while the Federal High Court must authorise the final approved merger documents to conclude the transaction.

Investors appeared to respond positively to the business combination yesterday at the NSE as the share prices of the banks rose by nearly the highest daily allowable change at the stock market. Diamond Bank recorded the highest gain of 9.47 per cent to close at N1.04 while Access Bank followed with a gain of 9.40 per cent to close at N8.15 per share.

Market sources said the price rally was stimulated by the prospects and consideration of the merger. According to the proposal, Access Bank will acquire 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 banks, 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 seven Diamond Bank ordinary shares held as at the implementation date.

The offer represents a premium of 260 per cent to the closing market price of 87 kobo per share of Diamond Bank on the NSE as at the close of business on December 13, 2018, the date of the final binding offer.

After the completion of the merger, Diamond Bank will be absorbed into Access Bank and it will cease to exist under 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 cancelled, upon the merger becoming effective. Diamond Bank expects the transaction to complete in the first half of 2019.