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ABN AMRO Bank has acquired 93.4 per cent interest in Prime Bank from shareholders for a cash consideration of Rs 13.8 billion (EURO 172 million), equivalent to Rs 54 per share. The bank is also planning to launch a tender offer for all remaining shares of Prime Bank from minority shareholders.
According to the press release issued by bank on Monday, the acquisition will add significant scale to ABN AMRO’s franchise in Pakistan, making the combined entity the second largest foreign bank and one of the top 10 banks in the country with assets of Rs 124 billion (Euro 1.547 billion) and over 80 branches. The bank is already the third largest foreign bank in Pakistan.
ABN AMRO Asia CEO Jeroen Drost said that Pakistan had one of the world’s fastest growing financial markets and was key growth market for ABN AMRO in Asia.
“This transaction presents tremendous opportunities to accelerate our activities in the Pakistan market as we bring together our global expertise and resources with Prime Bank’s local client base and extensive distribution network,” he added.
ABN AMRO Pakistan Country Executive Naved A Khan said: “The acquisition not only underscores our commitment to expanding further in Pakistan, it also enhances significantly our ability to serve a larger client base with more sophisticated product offerings and customer services.”
Prime Bank President and CEO Saeed I Chaudhry said: “We have achieved strong organic growth and market share increase in the past”, The offer price of Rs 54 per share, equivalent to a price to book ratio of 4.0x, represents a premium of 41.8% over Prime Bank’s average share price over the past 12 months.
ABN AMRO intends to finance the acquisition and tender offer through internal resources. The tender offer is expected to commence on March 09 and to close on March 30.
Prime Bank’s profile is an excellent strategic fit for ABN AMRO’s mid-market strategy. On the commercial side, over 50 per cent of Prime Bank’s current loan portfolio is placed with small-to-medium enterprises (SME’s), enabling ABN AMRO to build critical mass and diversify its risk portfolio in a high growth SME business banking market.
Saeed Chaudhry, President and CEO of Prime Bank said “we have achieved strong organic growth and market share increase in past. This merger with a global bank like ABN AMRO will further fast-track the growth of the combined entity.”
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