National bank has been struggling to stay on its feet with little or no fruits at all. Particularly after it posted a 98% drop in profits from 400 million to 7 million, in the last financial year. Because of this, on April 18th 2018, KCB offered to buy 100 per cent shares of NBK by way of share swap of ten ordinary shares of NBK for one shares of KCB.
The deal, however, has been greatly opposed by some investors and members of the National Assembly Finance Committee. Some shareholders even filed a petition at the high court, challenging the acquisition of NBK by KCB.
The parties argued that the share swap and transfer was irregular because there had been no public participation, owing to the fact that the National Treasury and National Social Security Fund have up to 50 per cent of the shareholding.
Despite all this, the high court dismissed the petition, citing the fact that the agreement took into consideration all the rules and regulations listed under The Capital Markets Act Regulations of 2002.
In part, the act states that, “Acquiring effective control means the acquisition of shares in the offeree, which together with shares if any, already held by the offeror, or by any other person that is deemed to be associated, or a company, or by any other company that is deemed by virtue of being a related company to the offeror, or by persons acting in concert with the offeror, carry the right to exercise or control the exercise of not less than twenty-five percent of the votes attached to the ordinary shares of the offeree, provided that such person already holding twenty five percent or more but less than fifty percent of the voting shares.”
KCB group put up an ad urging National Bank shareholders to exchange their shares for KCB group shares. NBK is the second bank to be acquired by KCB group after KCB got the green light from Central bank to take over five branches of Imperial Bank Limited.
