Titan Trust Closes N13.5b Takeover Bid for Union Bank’s Minority Shareholders

Titan Trust Bank Limited closed application list for a N13.5 billion takeover bid for minority shareholdings in Union Bank of Nigeria (UBN) Plc, in a move that may lead to delisting of the first generation bank from the Nigerian Exchange (NGX).

Offer circular for the mandatory takeover offer (MTO) showed that Titan Trust Bank is offering to acquire about 1.928 billion ordinary shares of 50 kobo each of UBN held by minority shareholders at N7 per share. The application list for the MTO is scheduled to close today.

With the acquisition of 1.928 billion shares under the MTO, Titan Trust Bank, which had acquired 27.337 billion ordinary shares or 93.41 per cent majority equity stake in UBN in May 2022, will have 100 per cent holding of the first generation bank.

Titan Trust Bank had in May 2022 completed the acquisition of the shares of UBN’s major shareholders, including Union Global Partners Limited (UGPL), Atlas Mara Limited (ATMA), Standard Chartered Bank (SCB), Montane Partners West Africa Limited (Montane) and Mr. Emeka Emuwa, resulting in a transfer of 93.41 per cent of Union Bank’s issued share capital to Titan Trust. UGPL and ATMA had taken over the first generation bank in 2012.

After the full acquisition of the minority shares, Titan Trust Bank at the weekend indicated it will delist UBN and reregister the bank as a private limited liability company, ending 52 years of active listing and trading on the shares of the first generation bank at the stock market.

Re-registration of UBN as a private company implies that beyond delisting from the NGX, its shares will also not be traded on the NASD OTC Securities Exchange, the platform for trading in the shares of unlisted public limited liability companies. Incorporated in 1969, UBN was listed on the NGX in 1970.

The MTO was primarily triggered by Section 131, Part XII of the Investment and Securities Act, No. 29, 2007 and Rule 445 of Securities and Exchange Commission (SEC) Rules and Regulations, 2013. Section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders. The MTO is usually at the transaction price for the deal that led to the emergence of the major shareholding.

While many MTOs in recent period have been for part of shares held by minority shareholders, Titan Trust Bank’s offer is for full acquisition of the minority shares, which will enable the new major investor to take over UBN fully and turn it into a private company.

The decision to accept MTO generally is at the instance of the targeted minority shareholders. Sources however indicated that parties to the Titan Trust Bank MTO have launched aggressive marketing to woo hard-pressed minority shareholders of the first generation bank to accept the MTO.

Titan Trust Bank has indicated that Luxis International DMCC and Magna International DMCC – the two majority shareholders of Titan Trust Bank will provide about N13.493 billion being the total amount required to settle the full acquisition of the remaining 6.59 per cent minority equity stake. Luxis International DMCC holds 48.09 per cent equity stake in Titan Trust Bank while Magna International DMCC holds 46.46 per cent equity stake. Three other individual shareholders- Winston Udeh, Mmr. Tunde Lemo and Mr Andrew Ojei hold 3.63 per cent, 0.91 per cent and 0.91 per cent equity stake respectively.

Titan Trust Bank was incorporated in December 2018 and obtained its National Banking license in April 2019 from the Central Bank of Nigeria; to operate as a commercial bank with national authorisation. It currently has paid up share capital of N29.20 billion and shareholders’ funds of N36.39 billion. Total assets stood at N246.24 billion. Gross earnings stood at N13.62 billion while net profit was N4.40 billion.

Key extracts of the audited report and accounts of UBN for the year ended December 31, 2021 showed that gross earnings rose by 8.9 per cent to N175 billion in 2021 as against N160.7 billion recorded in 2020. Net operating income after impairments slipped by 3.6 per cent to N99.7 billion as against N103.4 billion. Profit before tax followed the downtrend with a drop of 19.3 per cent from N25.4 billion in 2020 to N20.5 billion in 2021. Gross loans rose by 22 per cent to N899.1 billion in 2021 as against N736.7 billion in 2020. Customer deposits also grew by 20.4 per cent from N1.1 trillion to N1.4 trillion.