THE merger deal between First Bank Corporation (FBC), Southern Africa Reinsurance Company (Sare) and National Discount House (NDH) has now reached an advanced stage awaiting signature by the two
According to the preliminary arrangement the deal would in the meantime leave out the National Discount House (NDH) which has been part of the initial talks. NDH would only come into the holding company later because it is not listed.
Respective boards of the two financial companies are reported to have agreed in principle to go ahead with the transaction, which would see the firms come under one holding company. Sare and FBC have since begun working on the information circular to shareholders.
First Bank Corporate would first need to restructure in order to fit into the holding company that would list on the stock exchange. Shareholders of the bank would get a share swap in the ratio of 1:1.
This means that shareholders would get a share in the listed holding company for every share held with the bank. The bank would then delist from the stock exchange.
“First Bank would restructure first before it becomes part of the new company. Shareholders would have a 1:1 share swap in the new company,”a source said.
NDH would come in as an acquisition. FBC would form the banking arm of the group while NDH would form the stockbroking and asset management division. If successful the deal would lead to the biggest financial institution by way of balance sheet. NDH managing director Ernest Matienga confirmed that NDH will not be part of the first stage of the merger.
“We will only join later because being an unlisted firm it would be easier to consolidate us into the business,” said Matienga.