March 2015
INTRODUCTION
In 2014, a significant level of mergers and acquisitions (“M&A”) was recorded in various sectors of the Nigerian economy. The sectors included banking, oil and gas, food and beverages, power, insurance and manufacturing. M&A transactions were in some instances triggered by regulatory directives while in other instances, transactions were driven by local investment and foreign direct investment.
M&A transactions in the banking sector were driven largely by regulatory directive. Following the repeal of the universal banking regime in 2010 by the Central Bank of Nigeria (“CBN”), commercial banks were directed to divest from their non-banking activities or adopt a holding company structure in the event that they chose to retain their non-banking activities. As a result of the CBN directive, the majority of commercial banks chose to divest from their non-banking activities which created significant M&A opportunities in 2013 and 2014.
The sale of 2 of the 3 bridge banks that were established by the Nigeria Deposit Insurance Corporation (“NDIC”) and subsequently acquired by the Asset Management Company of Nigeria (“AMCON”) also contributed to M&A activity in 2014. The bridge banks were established by NDIC after the revocation of the banking licences of three CBN intervened Nigerian banks due to liquidity challenges. AMCON, as the majority shareholder in the bridge banks, divested its interest in two of the three bridge banks, i.e. Mainstreet Bank Limited and Enterprise Bank Limited.
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