Two-year old Titan Trust Bank takes over Union Bank, Nigeria’s second oldest bank

 

The Board of Union Bank of Nigeria Plc (Union Bank) notified the NGX and Securities Exchange Commission that its investors Union Global Partners Limited, Atlas Mara Limited and other shareholders have reached an agreement with Titan Trust Bank Limited (TTB) to divest their shareholding in Union Bank to TTB. The agreement, which is subject to regulatory approvals and other financial conditions, will upon completion transfer 89.39% of Union Bank’s issued share capital to TTB.

The deal will see existing core investors in Union Bank, Union Global Partners Ltd (64.98%), Atlas Mara (25.53%) and other shareholders divest their core holdings totalling 89.39% in Union Bank to Titan Trust Bank. The bank did not comment on the purchase consideration.  The deal suggests a merely 2 years old bank (Titan commenced operations in October 2019) will be acquiring a 104-year-old bank. The deal, when consummated will be one of the most remarkable acquisitions in the Nigerian Banking space after STB acquired UBA in the landmark 2005 deal. 

Commenting on the transaction,  Union Bank Chair, Mrs. Beatrice Hamza Bassey said:  “On behalf of the Board, we congratulate all the parties involved in reaching this phase of the transaction and the Board looks forward to supporting the next steps to ensure a seamless completion of the process following regulatory approvals.

“We are grateful to our current investors whose significant and consequential investments over the past nine years facilitated the transformation of Union Bank, one of Nigeria’s oldest and storied institutions. Today, the Bank is well-positioned with an innovative product offering, a growing customer base of over six million and consistent year on year profitability. This is a solid foundation for our incoming investors to build on as we move into a new era for the Bank”.

 Chairman , Titan Trust Bank, Mr. Tunde Lemo, who also commented on the deal  said:  “The Board of Titan Trust Bank and our key stakeholders are delighted as this transaction marks a key step for Titan Trust in its strategic growth journey and propels the institution to the next level in the Nigerian banking sector.

“The deal represents a unique opportunity to combine Union Bank’s longstanding and leading banking franchise with TTB’s innovation-led model which promises to enhance the product and service offering for our combined valued customers”.

Chief Executive Officer of  Union Bank, Mr. Emeka Okonkwo said:   The “This transaction marks a significant milestone in the journey of our 104-year old Bank. Whilst thanking our current investors for their unwavering commitment to the Bank over the years, we welcome our new core investor, TTB. We recognize the strategic fit between the two institutions and expect that this deal will deliver the best outcome for our employees, customers and stakeholders. We look forward to collectively writing the next exciting chapter for Union Bank”.

The Chief Executive Officer of  Titan Trust Bank, Mr. Mudassir Amray said:  “After completing over two years of operations with aggressive organic growth, we are excited to have an opportunity for a significant leap forward in market share. UBN’s widespread presence, state-of-the-art technology platform, quality staff and strong brand loyalty fits well with our synchronized modular strategy. We look forward to delivering superior results for the benefit of our staff, customers, shareholders, and stakeholders”.

Rothschild & Cie acted as financial adviser and White & Case LLP and Banwo & Ighodalo acted as legal advisers respectively, to the selling shareholders of Union Bank.

Citigroup Global Markets Limited acted as financial adviser, Pricewaterhouse Coopers as due diligence partner, Norton Rose Fulbright LLP, Drew Law Practise and G. Elias & Co. acted as legal advisers respectively to TTB.

Union Bank currently has a market valuation of N147 billion trading at a price to earnings ratio of 5.69x. The bank has a net asset of N264 billion and a total asset of N2.56 trillion. The share price gained 10% today as investors who got wind of the deal loaded up the stock. Union Bank is down 5.3% in the last year. 

Whilst no purchase consideration was mentioned, Nairametrics estimates this acquisition will cost Titan Bank between N6 and N8 per share or close to N200 billion. Deals like this attract a “control premium” in the region of 40-70% on existing share price, depending on who is more desperate to their buy or sell.

What is in it for Titan Bank

From the comments of the major players in Titan Bank, this deal provides them a unique opportunity to grow market share and compete with the FUGAZ. Union Bank is currently a Tier 2 bank and right behind Stanbic IBTC which has a total asset of N2.7 trillion. 

GTB has a total asset of N5.1 trillion, the smallest of tier 1 banks. Others have between 8-10 trillion naira in total assets. Union Bank also has the branch network, technology and brand recognition that can quickly fast track Titan Bank into the mainstream of Nigerian Bank. 

Titan Trust Bank currently has just two bank branches located in Lagos. It does not have an Investor Relations Page. 

This marks the beginning of the end of a very dark chapter for Atlas Mara, the core investor in Union Bank. Since they commenced their pan-African acquisition of banks across Africa, they have gone from one controversy to another. Their share price has fallen by over 90% since trading started in 2013. Their exit, allows Union Bank to chart the course for stability in ownership and management allowing them to recapitalize and reposition for a very competitive financial services sector. Union Bank will likely leverage on the ecosystem of financial services businesses sponsored by the very influential Tunde Lemo.