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January 27, 2021

Banking market weekly snapshot: deals decline for a third week

By Hannah Wright

From 17 January 2021 to 23 January 2021, the banking industry saw a further decline in mergers and acquisitions, representing a continuation of a downwards trend in deals taking place since the start of the month.

There were 19 deals this week, when compared to 26 deals the previous week. Amongst the 19 deals were 14 acquisitions, 4 mergers and 1 asset transaction.

Most notably this week, Piramal Group received approval to acquire 100% of Dewan Housing Finance (DHFL) for $5.036bn in India on 18 Jan 2021. According to The Indian Express, the reportedly debt-laden mortgage lender -DHFL – declared Piramal as a successful bidder via the Committee of Creditors (CoC).

The transaction has been perceived as structurally positive for Piramal and other lenders, such as Bank of India and Union Bank. However, as stock is valued at zero, shareholders are expected to gain very little from the deal.

For under half the value of the principal transaction, First Abu Dhabi Bank acquired Egypt Bank Audi for $700m on 20 Jan 2021 due to difficult market conditions.

The deal will advance First Abu Dhabi Bank’s activity in Egypt, making it one of the largest foreign banks operating in the country in terms of assets.

First Abu Dhabi Bank and UBS AG (London Branch) acted as financial advisers, while Freshfields Bruckhaus Deringer LLP and Matouk Bassiouny & Hennawy acted as legal advisers to FAB on the transaction.

In the Philippines, Bank of the Philippine Islands merged with BPI Family Savings Bank on 20 January 2021 for $133.95m. The transaction is expected to close on 31 Dec 2021. BPI, which offers accounts, credit cards, personal loans, investment, and insurance products, will serve as the surviving entity.

BPI President and CEO, Cezar P. Consing, who is also the Chairman of BFSB commented: “As One BPI, our 8.5 million customers will be able to enjoy the full suite of the BPI group’s products, via all our digital and physical channels. Similarly, as One BPI, our employees will have the ability to work across a larger, more varied bank, while having continuity of tenure and job level.”

Cummins-American Corp also announced a merger with First Busey for $190.8m in the US, on 18 January. The deal is expected to close on 30 June.

First Busey Corporation, the holding company for Busey Bank, and Cummins-American Corp., the holding company for Glenview State Bank (GSB), jointly announced the signing of a definitive agreement pursuant to which First Busey acquired Cummins-American and GSB through a merger transaction.

Under the terms of the merger agreement, Cummins-American’s shareholders will have the right to receive 444.4783 shares of First Busey’s common stock and USD27,969.67 in cash for each share of common stock of Cummins-American with total consideration to consist of approximately 73% cash and 27% stock.

Concerning geographical segmentation of the deals, North America dominated with 8 deals, followed by Asia-Pacific and Europe with 6 and 3 deals, respectively. Middle East and Africa registered the fewest deals with a total of 2.

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