The price of Access Bank Plc. shares which increased after the announcement of its merger with Diamond Bank Plc last year drops

Since the announcement of the planned merger between Access Bank and Diamond Bank, the share price of former has declined by 32.52 percent. The share price of the bank, which stood at N7.45 on December 14, 2018, gained 9.4 percent to close at N8.15 on December 17, 2018, after the announcement of the proposed merger with Diamond Bank.

However, the share price has been steadily declining, dropping to N5.50 at the end of trading on the floor of the Nigerian Stock Exchange, NSE, on Wednesday, January 9. Access Bank, in its memorandum of agreement with Diamond Bank, offered cash consideration of N1 per Diamond Bank share, representing a total cash amount of N23.160billion, and the allotment of 6.62 billion new Access Bank ordinary shares representing the two new Access Bank ordinary shares for every seven Diamond Bank shares.

The bank said the offer represented a premium of 260 percent to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange as of December 13, 2018, the date of the final binding offer.

Analysts said the outstanding shares of the company, which currently stands at 28.93 billion, might go up further following the conclusion of a planned rights issue as the bank intends to raise N75billion through a rights issue.

“The implication of this development is that if the stock continues to decline, the bank may be forced to review the terms it has offered Diamond Bank shareholders. It would either have to issue a larger number of additional shares or a bigger cash payment,” analysts on Nairametrics said.

They added that an increased number of shares in issue could mean that the bank’s earnings per share and dividend payment might drop.

– Jan. 11, 2019 @ 14:57 GMT |