This week the deal for Diamond Trust Bank to acquire Habib Bank was approved by regulatory authorities. The Central Bank of Kenya approval notes that Habib will acquire 4.18% of Diamond Trust (the 6th largest bank in the country) and that the transaction would be completed on August 1, 2017, when Habib Bank (the 33rd largest) will cease being a licensed bank, and all its depositors, borrowers, employees, and creditors will be transferred to Diamond Trust.
As is the norm these days for large M&A deals to be approved in Kenya and the COMESA trade zone of Africa, there is a focus on job retention for as many of employees, and that there be no layoffs, while some business will continue with existing partners in terms of sales, distribution, servicing, and licenses for a defined period of time after the deal.
- The Competition Authority (CAK) has approved the Diamond Trust Habib deal “on condition that the acquirer, Diamond Trust Bank Kenya retains at least 41 employees of Habib Bank post transaction.” This is also seen in other recent deals approved by the Competition Authority:
- Distell Holdings which became the majority owner of Kenya Wine Agencies Holdings East Africa earlier this year was required to “retain the 42 employees at the production unit of KWAL for at least three years,”
- For the Coca Cola Beverages Africa purchase of Equator Bottlers (at Kisumu through Kretose Investment) “the merged entity retains at least 2,279 employees post transaction”
- And approval of the acquisition of 57.7% of General Motors East Africa by Isuzu Motors has a “condition that the merged entity will absorb all of the 383 General Motors East Africa employees.”
- Also, earlier, CAK, ordered listed banker I&M Holdings to retain 108 employees of Giro Commercial Bank, as a pre-condition for approval of the takeover.