Equity Group Holdings Plc (NASE:EQTY) entered into a binding term sheet to acquire Banque Populaire du Rwanda and African Banking Corporation, Zambia, African Banking Corporation, Tanzania and African Banking Corporation, Mozambique from Atlas Mara Limited (LSE:ATMA), ABC Holdings Limited and others for KES 10 billion on April 30, 2019. The consideration will be paid by the issue of approximately 252.48 million ordinary shares of EGH representing approximately 6.27% of the pro forma share capital of EGH post-closing. The aggregate consideration ultimately payable will be that set out in the definitive agreements negotiated following confirmatory due diligence, and may be subject to adjustment (positive or negative), based on the performance of the banks through consummation of the transactions, and on the net asset value of the banks at the time of closing relative to the net asset value they reported as at December 31, 2018.

Further, actual aggregate consideration could include an additional conditional deferred amount. Equity Group Holdings Plc will be acquiring 62% stake in Banque Populaire du Rwanda (BPR) and via the Company's subsidiary ABC Holdings Limited, all of Atlas Mara's indirect interests in African Banking Corporation Zambia (BancABC Zambia), African Banking Corporation Tanzania (BancABC Tanzania), and African Banking Corporation Mozambique (BancABC Mozambique). Following the transaction, Atlas will become a shareholder in EGH.

The parties would anticipate mergers of their respective banks within each of Rwanda and Tanzania. As part of the proposed transaction, the Atlas and EGH also consider that it may be of mutual benefit to invest further cash resources in EGH at the same time or shortly after consummation of the proposed transaction, which would increase Atlas Mara's shareholding in EGH. The parties intend to further explore this and set out the final agreed position in the definitive transaction agreements, subject to obtaining the required regulatory and shareholder approvals.

The proposed transaction is subject to confirmatory due diligence, definitive transaction documentation, relevant regulatory approvals from the Capital Markets Authority, the Central Bank of Kenya and respective competition regulators and the central banks in each of the jurisdictions involved, shareholder approvals and other conditions precedent customary for transactions of this nature and is expected to close between the fourth quarter of 2019 and the first quarter of 2020, depending on jurisdiction. The proposed transaction would result in the deconsolidation of the four banks, with the accounting treatment expected to have a negative impact on the stated profit and capital of the Company for 2019. On January 2, 2020 Atlas Mara Limited stated that Atlas Mara noted that confirmatory due diligence has been substantially concluded.

As of the date of this announcement, the parties have yet to sign detailed transaction agreements. The Company also announces that its next Annual General Meeting will be held in May 2020. The Proposed Transaction is expected to be dilutive to book value at closing (primarily as a result of impairment of acquisition-related intangibles and goodwill), and it is expected to be value accretive long-term.

Anjarwalla and Khanna Advocates acted as legal advisor to Equity Group Holdings Plc and Stanbic Bank Kenya Limited acted as financial advisor to Equity Group Holdings Plc. Citigroup Inc acted as financial advisor to Atlas Mara Limited.