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KCB urges NBK investors to swap their stocks



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.

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