DNB confirms that a merger with Sbanken can become a reality if they do not reach the required acceptance rate of 90 per cent. This is bad news for everyone who is fighting for Sbanken to remain independent of Norway’s largest bank.
Thus, it can be much easier with a merger than it seems with the current support among Sbanken’s shareholders.
DNB submitted in April bid for Sbanken of NOK 11.1 billion. The owners of Sbanken had until 24 May at 4.30 pm to accept the cash offer of NOK 103.85 per share. A prerequisite for an acquisition is that at least 90 per cent of Sbanken’s owners accept DNB.
But on Tuesday, the major bank announced that only 53.1 per cent of the owners of Sbanken had accepted. In addition, DNB owns 9.8 percent of the shares, but 63 per cent is far from enough for a forced redemption of the remaining shareholders.
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A few percent up
But a merger with Sbanken only requires the support of two thirds of the owners, ie a meager 67 per cent, and that is not far off. The online newspaper wrote over a month ago that this could be the outcome, where Sbanken’s owners are left with DNB shares.
Many
And now the head of investor relations at DNB, Rune Helland, opens up the possibility of a merger in an e-mail to a shareholder that Nettavisen has had access to (see below).
Merger or nothing
Here, Helland writes that the alternative to an acquisition is a merger. If this can not be achieved either, there will be no transaction. As Helland writes, DNB cannot own more than 10 per cent of Sbanken and can therefore not buy more Sbank shares in the market.
Helland confirms the same in an e-mail to Nettavisen. He writes that from day one they have communicated that the intention is a merger between DNB and Sbanken. According to Helland, the offer from DNB includes the right to complete the transaction with more than two-thirds approval, which is what a merger requires.
DNB extended the acceptance deadline to 7 June and can extend it by another month to get enough support. As far as Nettavisen understands, there are a number of funds on the fence, because a cash settlement will only give them money in several months.
The market value of DNB on Tuesday afternoon was NOK 282.3 billion. This is 25.4 times more than the value of the bid on Sbanken at NOK 11.1 billion. Simply put, Sbanken’s shareholders will receive a meager 4 per cent of DNB’s values through a merger.
Read also: Finance expert harasses with DNB: – Appears as the banking world’s Egon Restaurant
More sugar, please
An alternative to reaching out to DNB is to sweeten the bid. Analyst Jan Erik Gjerland in ABG Sundal Collier says Finansavisen that the bid must be raised significantly for DNB to succeed.
Gjerland believes an acquisition will entail synergies for DNB of just over NOK 3 billion. These are synergies that must be distributed between buyer and seller for DNB to reach the dream limit of 90 percent.
– I think DNB must reach out to give away half of these synergies, and in my calculation, Sbanken will then set the price up to 119 kroner. I do not think DNB will come up with a bid that is higher than this, but I think somewhere between today’s bid price and 119 kroner is where we will end up, Gjerland says to Finansavisen.
The price on Sbanken on Thursday morning is NOK 102.80, which it has done for a couple of days (see the graph below).
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