Kenya-based Equity Bank has shelved the discussions to acquire the Africa banking businesses of Atlas Mara (ATMA) due to the impact of the Covid-19 pandemic.
The proposed deal included the acquisition of ATMA’s banking businesses in Mozambique, Rwanda, Tanzania and Zambia.
Under the agreement, Equity would fully own African Banking Corporation (ABC) in Mozambique, Tanzania and Zambia and acquire a 62% stake in Banque Populaire du Rwanda.
In return, London Stock Exchange (LSE)-listed firm ATMA would receive shares equivalent to a 6.72% stake in Equity worth around KES10.9bn ($102.4m).
The decision to abandon the acquisition talks is in line with the Equity Group’s (EGH) view on the uncertainty of risks brought about by the pandemic.
The crisis also pushed the bank to withdraw its proposed dividend payouts worth KES9.5bn to its shareholders.
In a statement, Equity Group CEO James Mwangi said: “The board has considered the events that have taken place since January when the two parties agreed to extend transaction discussions and particularly the impact of the Covid-19 pandemic to the world and the economies in which EGH operates.
“After careful consideration, EGH and ATMA have mutually agreed to discontinue discussions on the transaction for the foreseeable future.”
Mwangi said that the decision to halt the acquisition talks had to be taken as business continuity demanded prudent risk assessment and mitigation amid the economic downturn.
The bank is focusing on conserving cash for supporting its customers in Covid-19 recovery.
However, the regional bank is still committed to expanding its footprint in Africa.