South African lender FirstRand is to takeover Aldermore Group, a British bank with a 1.1 billion pound offer that implies a multiple of 1.8 times Aldermore’s reported net tangible book value of £607.1million as of September 30.
Board of Aldermore recommended the takeover offer from the South African financial services group which values the UK challenger bank, that emerged after the financial crisis to fill a gap in small business lending and capitalize on problems at bigger lenders such as Royal Bank of Scotland and Lloyds.
According to the retail bank Group Q3 2017 Interim Management Statement, “Net loans up 12% to £8.4bn (FY 2016: £7.5bn), driven by £2.4bn of new lending (9M 2016: £2.3bn) and continued strong capital generation with CET1 ratio that is now above 12%”, citing strong demand from small and medium sized businesses, homeowners and landlords.
“The deal would help to diversify its UK business and combined with its Moto Novo second hand motor finance group would form a platform to cross selling and developing other financial services products” said FirstRand.
“It will allow the FirstRand Group to allocate more financial resources to our operations in Africa” added Johan Burger, chief executive of FirstRand.
The 313 pence offer represents a 22.3 percent premium to Aldermore’s closing share price of 245 pence on Oct. 12, a day before the companies announced they were in the process of reaching an agreement.
Phillip Monks, Aldermore’s CEO commented that “Ongoing delivery against our strategic and financial targets extends our track record of performance and provides us with continued confidence in our future prospects. Both of these factors have been reflected in the offer received from FirstRand, which the Board is recommending to Shareholders”.
“With the backing of their considerable resources and wider capabilities, we will be able to accelerate the delivery of our strategy and further expand the products and services we offer our customers” he added.