Stock market to lose N224.2b to Union Bank’s delisting

Union Bank of Nigeria (UBN) Plc is finalising arrangements to delist its shares from the Nigerian stock market, a move that will reduce the market’s capitalisation by N224.23 billion.

The board of directors of UBN yesterday confirmed that the 54-year old bank has entered the final phase of its delisting process, highlighting the imminent exit of the first generation bank after more than 53 years of listing at the stock market.

Incorporated in May 1969, UBN, one of the oldest listed company on the Nigerian Exchange (NGX), was listed in January 1970 and it has been one of the active stocks in the highly influential banking sub-sector. The banking sub-sector is the most influential group at the stock market, in terms of key indicators of capitalisation and activity.

The board said the second oldest bank “is finalising the process of obtaining approval to delist” its shares from the Nigerian Exchange (NGX). The shareholders will be paid a final price of N7.70 per share, estimating the value of the bank at N224.23 billion. However, the bank closed yesterday with a market value of N193.65 billion at N6.65 per share.

“Consequent upon the approval, the Registrars will remit the scheme consideration (N7.70 per share) to all shareholders of the bank, pursuant to the decision of the court-ordered meeting and the subsequent sanction by the Federal High Court. All shareholders of the bank are enjoined to ensure that their accounts have been duly mandated, for the purpose of receiving the scheme consideration,” the board stated.

The imminent delisting followed the acquisition of the shares held by minority shareholders by Titan Trust Bank Limited, the new majority core investor in the bank.

Titan Trust Bank had in May 2022 completed the acquisition of the shares of UBN’s major shareholders, including Union Global Partners Limited (UGPL), Atlas Mara Limited (ATMA), Standard Chartered Bank (SCB), Montane Partners West Africa Limited (Montane) and Mr. Emeka Emuwa, resulting in a transfer of 93.41 per cent of Union Bank’s issued share capital to Titan Trust. UGPL and ATMA had taken over the first generation bank in 2012.

The acquisition of the majority shareholding by Titan Trust Bank triggered mandatory takeover offer (MTO) for the acquisition of minority shares.

Offer circular for the mandatory takeover offer (MTO) showed that Titan Trust Bank offered to acquire about 1.928 billion ordinary shares of 50 kobo each of UBN held by minority shareholders at N7 per share.

With the acquisition of 1.928 billion shares under the MTO, Titan Trust Bank, which had acquired 27.337 billion ordinary shares or 93.41 per cent majority equity stake in UBN in May 2022, would have 100 per cent holding of the first generation bank.

After the full acquisition of the minority shares, Titan Trust Bank had indicated it would delist UBN and reregister the bank as a private limited liability company, ending 53 years of active listing and trading on the shares of the first generation bank at the stock market.

Re-registration of UBN as a private company implies that beyond delisting from the NGX, its shares will also not be traded on the NASD OTC Securities Exchange, the platform for trading in the shares of unlisted public limited liability companies.

The MTO was primarily triggered by Section 131, Part XII of the Investment and Securities Act, No. 29, 2007 and Rule 445 of Securities and Exchange Commission (SEC) Rules and Regulations, 2013. Section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders. The MTO is usually at the transaction price for the deal that led to the emergence of the major shareholding.

While many MTOs in recent period have been for part of shares held by minority shareholders, Titan Trust Bank’s offer was for full acquisition of the minority shares, which enables the new major investor to take over UBN fully and turn it into a private company.

Titan Trust Bank was incorporated in December 2018 and obtained its National Banking license in April 2019 from the Central Bank of Nigeria; to operate as a commercial bank with national authorisation.