Stanbic Holdings has announced a proposed acquisition by Stanbic Africa Holdings Limited “of up to 59,000,000 ordinary shares of Stanbic Holdings Plc (15% of the company) from other shareholders.” The offer price is Sh 95.00 for every share, a 13.7 percent premium in line with the price yesterday. Currently, Stanbic Africa holds 60 percent of Stanbic Holdings.
“Headline numbers suggest the tender offer is at healthy multiples relative to recent historically traded metrics. Our fair value estimates for the stock stand at KES 73.36 excluding rate cap reversals. The tender offer, therefore, is at a notably higher price relative to our estimates of fair value of the stock. We do not think Stanbic will have significant pricing power on [the] reversal of rate caps, given pre-cap NIMs did not compress as significantly as a number of other banks,” Kestrel Research says.
Once the tender offer is successfully completed, the free float of the stock will reduce significantly hence having a negative effect ‘on price discovery of the stock.”
The offer is at a discount to the overall book value including goodwill. Additionally, the offer price is justified because the return on equity for the stock has remained below the cost of capital.
“We do, however, note that Stanbic has embarked on a journey to be more ‘retail’ focused, which may be positive for the bank over and above our estimates.”