• Nedbank launches $852M tender offer for 66% of Kenya's NCBA

• Shareholders holding 77.5% of capital have committed irrevocably

• Nine regulators across five countries must still approve the deal

Nedbank Group, South Africa's fourth-largest lender by assets, opened a $855-million tender offer on May 4 to acquire a controlling 66% stake in Kenya's NCBA Group PLC. The bank circulated formal offer documents to shareholders, starting a six-week window that closes July 10, in what would be the most consequential cross-border bank acquisition in East Africa in more than a decade.

The offer values NCBA at approximately KES 110 billion (around $852 Million), or KES 105 per share. Shareholders who tender will receive KES 2,100 in cash and 4.02994 newly issued Nedbank shares listed on the Johannesburg Stock Exchange for every 100 NCBA shares accepted, according to the shareholder circular published on May 4. Investors whose entitlement falls below 200 Nedbank shares — typically retail holders of fewer than 9,400 NCBA shares — will receive the full consideration in cash at a flat rate of KES 10,500 per 100 shares, a provision Nedbank expanded in March to shield smaller shareholders from the cost of holding offshore securities.

"Nedbank's South African home market is maturing, competition is intensifying and the returns available in East Africa are structurally more attractive," Nedbank Chief Executive Jason Quinn said when the deal was announced in January.

The transaction, if completed, would give Johannesburg-based Nedbank its first majority foothold in East Africa, where it currently operates only a representative office. It would also make the lender a controlling shareholder of one of Kenya's three largest commercial banks by deposits.

Execution risk

Shareholders holding approximately 77.54% of NCBA's issued capital had signed irrevocable undertakings to accept the offer — up from 71.2% when the deal was first announced in January, according to the shareholder circular. That figure substantially reduces the risk that the bid falls short of its pro-rata target, though nine separate regulatory bodies must still grant approval before the transaction can close. Those regulators span five countries and include the South African Reserve Bank, the Central Bank of Kenya, the Bank of Uganda, the Bank of Tanzania, the National Bank of Rwanda, and the COMESA Competition Commission, according to the circular.

The NCBA board unanimously recommended the offer to shareholders, citing the independent assessment of Faida Investment Bank, appointed as the transaction's independent financial adviser in accordance with Kenyan takeover regulations. "The existing contractual and statutory employment rights of NCBA management and employees will remain in full force,"  the board wrote in its letter to shareholders. NCBA Chief Executive John Gachora later said that the protection of staff, brand and local governance had been central to the board's decision to recommend the transaction, according to TechCabal.

Nedbank structured the deal as a partial pro-rata bid rather than a full buyout, deliberately leaving 34% of NCBA's shares in public hands and preserving its listing on the Nairobi Securities Exchange. The structure was made possible by a CMA exemption granted February 19 that released Nedbank from an obligation to extend a mandatory offer for 100% of NCBA's capital — a rule that would have materially increased the transaction's cost and complexity.

NCBA, formed in 2019 through the merger of NIC Group and Commercial Bank of Africa, operates 122 branches across Kenya, Uganda, Tanzania and Rwanda and serves more than 60 million customers, making it Africa's largest bank by customer count. The group reported average return on equity of approximately 19% since 2021 and distributes more than KES 1 trillion in digital loans annually, according to the January offer announcement. Nedbank has indicated that the deal would serve as a platform for further expansion into Ethiopia and the Democratic Republic of Congo.

Results of the offer are due no later than July 21. If all nine regulatory approvals are not secured by December 31 — the deal's long-stop date — the offer lapses. Settlement, including the dispatch of Nedbank shares and cash payments, is targeted from the tenth trading day after the announcement that the offer has become unconditional.

Idriss Linge