BRITISH bank Barclays and Absa have agreed to a landmark deal in which the latter will acquire Barclays Africa in a transaction worth more than R18bn.
The deal effectively transfers Barclays’ African assets to Absa, creating a unit with 14.4-million customers through a network of more than 1,300 outlets and employing more than 43,000 staff across 10 markets.
Absa and Barclays, which is a majority shareholder in the South African bank, said on Thursday that the deal fulfilled a long-held ambition to integrate their African businesses.
It also achieves Barclays’ goal of increasing its stake in Absa from 55.5% to 62.3%.
Under the deal, Barclays will combine most of its operations in Africa with Absa.
The proposed combination will be achieved by Absa acquiring Barclays Africa, the proposed holding company of the combined portfolio, for 129,540,636 Absa ordinary shares, representing value of R18.3bn for Barclays Africa.
"As a result of the transaction, Barclays’ stake in Absa will increase from 55.5% to 62.3%," the banks said in a joint statement.
"It is expected that Barclays Africa will hold, at the effective date of the proposed combination, all or a significant majority of the portfolio, comprising Barclays’ ownership interests in banking operations in Botswana (67.8%), Ghana (100%), Kenya (68.5%), Mauritius (100%), the Seychelles (99.8%), Tanzania (100%), Uganda (100%) and Zambia (100%), as well as the Barclays Africa regional office in Johannesburg (100%)," said the statement.
Barclays and Absa said the listings of Barclays Bank Kenya and Barclays Bank Botswana would continue to be maintained as only the shares held by Barclays in those entities would be transferred in the proposed combination.
The proposed combination would not affect the number of shares held by minorities in Barclays’ units in Kenya and Botswana, it said.
The deal opens a new frontier in the battle for market share in sub-Saharan Africa, where Standard Bank is the largest by assets and income.
Antony Jenkins, the recently appointed CEO of Barclays, said bringing the units together was an important step in its One Bank in Africa strategy and its ultimate goal of becoming the "go to" bank in Africa.
"This transaction will give us a platform from which we can further grow our Africa business to the benefit of customers, colleagues, shareholders and the communities in which we operate," he said.
Absa group CEO Maria Ramos said the deal was a "compelling and unique" opportunity to further the bank’s African expansion strategy.
"We are tremendously excited by the opportunities for growth across the continent and the geographically diversified earnings potential that a combined business would deliver," said Ms Ramos, who is also CEO of Barclays Africa.
In October, Ms Ramos was reluctant to divulge how Absa and Barclays might expand into the region, even though analysts expected it would mostly be organic rather than through acquisitions.
The Absa CEO had not ruled out inorganic expansion, and previously said the group was keeping its options open, particularly in markets such as Nigeria, where Absa and Barclays do not have a retail bank.
"Our priority will be to create sustainable growth over the next three years in chosen client segments and selected geographies. South Africa continues to be a springboard for growth in Africa. Our objective is to be the bank that people go to first," she said in October.