meanwhile The Board of Directors of SBM Holdings Ltd (SBMH) wishes to inform its shareholders and the public in general that, subject to regulatory approval, it has at its meeting of 21 November 2016 resolved to proceed with the acquisition of Fidelity Commercial Bank (FCB), headquartered in Nairobi, Kenya with a network of 14 branches across the country and a total balance sheet as at June 2016 ofKenya Shillings 12. 9 billion. SBMH will acquire the entire share capital of FCB

And the article continues..

This is where deep understanding of accounting principles help.

This is not an acquisition, its a merger, I can assure you the shareholders of Fidelity will receive equivalent value shares in SBM or whichever entity shareholders of SBM use as their dividend receiving vehicle.

May be you should not be allowed to post.

Fidelity is a bank! do you understand how the prudential guidelines work, a bank will most likely not become insolvent, simply because its liquidity issues will be picked up months before any insolvency. Even Chase could have continued limping for another year had it been allowed.

Secondly, which investor in his right mind can give away a company for free let alone a bank that still has a banking license. And still operational.

When insolvency kicks on, the business valuation model changes, assets are carried at fair value, meaning the HO of say Fidelity Bank can increase in value 10 fold. The banking license is sold separately, the customer list, contracts, even accumulated tax losses are assets and are sold

Ummm, Fidelity is a toxic asset: costs more to keep open and run that it earns. Liquidity issues were known months ago.

CBK must have "convinced" Fidelity main shareholder to take a hike...they don't want to close another bank, do they?

Fidelity assets are owned by the shareholder, Imperial style: that HO is not the bank's.

SBM bought the license...probably most assets are non performing . Liabilities are due, and cannot be paid, the capital injection is needed to keep doors open.

I think the shareholder got a great deal: Walk away from this hot mess and never see the inside of a court.

Merger my foot LOOOOOOOOOOOOOOOOOOOOOOOOL !!!!!

You are the one speculating, Obi. Article clearly says that the deal value was $1. You are speculating now that it is a merger? If it was a merger, they would have mentioned Exchange/ Swap ratio and not deal value.

http://www.cnbc.com/2016...nyas-fidelity-bank.html

Funny, but the mentioning of the deal price of Usd 1 is what has led me to believe that its not a mere acquisition. When an acquisition takes place, they always say "for an undisclosed amount" especially for private entities. In this instance, there has to be a share swap somewhere in the backroom between the 2 shareholders.

Not true, Obi. You cannot have a deal value of $1, and in addition have a share swap. The value of the deal is one thing, and the consideration (how you pay) can then either be cash or stock (or both). But in stating the deal value, you would take both into account.

Regarding "for an undisclosed amount", not sure SBM is actually a private institution in Mauritius. disclosure could have been driven by Mauritius regulations.

I know 1USD deals are not uncommon. I've done 1ksh deals myself. My question is, had u been there with 2 dollars would they have sold it to you?

This is a normal business transaction when you want to transfer property to another party. For example you want to help you bro who is poor. This safes him from having to.deal with your other real etc