Falsehood has turned to truth.

When the news floated in that one of Nigeria’s hitherto top lenders, Diamond bank is having trouble and are about to be acquired by Access bank, Diamond bank denied it.

But the chicken has come home to roost, and after months of speculation and denials, the bank has now officially admitted that it is in a deal with Access bank.

The question is - is this deal a merger or an outright acquisition?

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Diamond bank is calling it a merger. In a report by News Agency of Nigeria, quoting Diamond Bank’s Chief Executive Officer, Uzoma Dozie, the bank said, “its Board had selected Access Bank as the preferred bidder with respect to a potential merger of both banks”.

The proposed merger is expected to be completed in the first half of 2019.

“The proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.

uzoma dozie

*Diamond Bank CEO, Uzoma Dozie

“Based on the agreement reached by the boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising N1 per share in cash,” Dozie was quoted as saying.

But is this really a merger, or is Diamond Bank trying to avoid calling a spade by its name?

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“What you have is an outright acquisition. In a merger, two companies of equal value come together as an entity. They lose their identities and settle for a new one.

"This is not the case with the Diamond and Access bank deal. In an acquisition, a stronger or smaller business acquires the smaller or weaker one.

“Diamond bank had a problem and Access bank acquired it. Its that simple,” said an Economist and Financial analyst who didn’t want to be named in a chat with Bounce News.

Last week, Diamond bank withdrew its international licence and applied for a new local banking licence from the Central Bank of Nigeria.

So, here are a few things that will change when the deal is finally completed in 2019:

*Diamond bank as a brand will no longer exist.

* Diamond bank’s shares would be absorbed into Access Bank at the completion of the deal and Diamond Bank would cease to exist under Nigerian law.

*Diamond bank investor including Carlyle Group can now decide what to do with their investment. Recent reports say most shareholders have favoured acquisition.

*The listing of Diamond Bank’s global depositary receipts on the London Stock Exchange will be cancelled, upon the completion of the deal.

This is a developing story. More details will be made available after verification.

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