November 23, 2011
Proposed Scheme of Merger between Ecobank Nigeria Plc. and Oceanic Bank International Limited and Proposed Scheme of Arrangement for the Reorganization of the Share Capital of Ecobank Nigeria Plc.
Ecobank Nigeria Plc. has notified The Exchange that, following discussions between the Boards of Directors of Ecobank Nigeria Plc. (“Ecobank Nigeria”) and Oceanic Bank International Limited (“Oceanic Bank”), both subsidiaries of Ecobank Transnational Incorporated ("ETI"; NSE: ETI, GSE: ETI; BRVM: ETIT), they are pleased to announce that Ecobank Nigeria and Oceanic Bank have agreed to merge their respective businesses. The proposed merger will be effected through a Scheme of Merger pursuant to Part XII of the Investments and Securities Act (No. 29) of 2007 (“Scheme of Merger”) and when concluded, will result in Oceanic Bank being merged with Ecobank Nigeria, leaving Ecobank Nigeria as the surviving entity.
As a consequence of the proposed Scheme of Merger, it is expected that ETI’s shareholding in the enlarged Ecobank Nigeria will increase from its current 85% to approximately 93%, further reducing Ecobank Nigeria's minimum free float to maintain listing on the Nigerian Stock Exchange. Therefore in consideration of the interest of minority shareholders of Ecobank Nigeria, the Board of Directors of Ecobank Nigeria, on 17 November 2011, after considering the valuation advice of BGL Plc., financial advisers to Ecobank Nigeria as well as an independent fairness opinion issued by Afrinvest (West Africa) Limited, unanimously accepted a proposal from ETI to acquire the shares in Ecobank Nigeria not already owned by ETI, and resolved to recommend to its shareholders that concurrent with the Scheme of Merger, Ecobank Nigeria undertakes a Scheme of Arrangement with its shareholders for the reorganization of its share capital (the “Scheme of Arrangement”).
The Scheme of Arrangement will be undertaken pursuant to section 539 of the Companies and Allied Matters Act and will involve a cancellation of part of Ecobank Nigeria’s share capital. Under the terms of the Scheme of Arrangement minority shareholders will receive 1 (one) ordinary share in ETI (“Scheme Consideration”) to be credited as fully paid; for every 5.16 Ecobank Nigeria shares previously held by the minority shareholders, such that Ecobank Nigeria will be a wholly-owned subsidiary of ETI. The Directors of Ecobank Nigeria consider the Scheme Consideration to be fair and reasonable compensation for the cancellation of the Ecobank Nigeria shares pursuant to the proposed Scheme of Arrangement.
The Directors of Ecobank Nigeria are of the view that the proposed Scheme of Arrangement is in the interests of both Ecobank Nigeria and its shareholders. As a consequence of the proposed Scheme of Merger, Ecobank Nigeria may no longer qualify for listing on the NSE and shareholders will therefore own equity in an unlisted public company. In addition, the proposed Scheme of Arrangement will enable Holders of Ecobank Nigeria Scheme Shares to own equity in ETI, which is a more liquid stock, listed on the three major West African stock exchanges and with attendant diversification benefits from ETI’s operations in 32 countries. In addition, by becoming shareholders in ETI, Ecobank Nigeria’s shareholders will share in the benefits of the merger of Oceanic Bank with Ecobank Nigeria.
The proposed Scheme of Arrangement (along with the Scheme of Merger), is subject to shareholder and regulatory approvals (including those of the Central Bank of Nigeria and the Securities and Exchange Commission), as well as the sanction of the Federal High Court.