DNB Bank to launch cash offer for 100% shares of Sbanken ASA

OSLO: DNB Bank ASA has reached an agreement with Sbanken ASA to launch a recommended voluntary cash tender offer for 100% of the shares of Sbanken.

A cash consideration of NOK 103.85 will be offered per share, which implies a total consideration for all the Shares of approximately NOK 11.1 billion (based on 106,869,333 shares outstanding as per 14 April 2021).

The Offer Price represents a premium of 29.8% over the closing price of the Shares on 14 April 2021 of NOK 80.0 and a premium of 49.8% over the average volume weighted share price adjusted for dividend during the last six months up to and including 14 April 2021 of NOK 69.3.

Shareholders representing a total of approximately 29% of the outstanding Shares have, on certain terms and conditions, undertaken to accept the Offer, including the Company’s largest shareholders Altor Invest 3 AS and Altor Invest 4 AS which hold in aggregate 25% of the outstanding Shares in the Company. Additionally, DNB currently owns approximately 1% of the outstanding Shares in the Company.

Moody’s upgrades Sbanken ASA’s deposit rating to A2

Kjerstin Braathen, CEO of DNB, comments: “We now have an opportunity to combine two of Norway’s top providers of digital customer experiences into one large innovative environment spread across our offices in Bergen and Oslo. We’ll be able to achieve so much more together than we can separately, and we’ll strive to create Norway’s best customer experiences- regardless of industry”.

Key terms of the Offer

The Company’s shareholders will be offered NOK 103.85 per Share in cash consideration. The Offer Price implies:

 · A premium of 29.8% to the closing price of the Shares on the Oslo Stock Exchange on 14 April 2021 of NOK 80.0.

 · A premium of 49.8% to the volume weighted average share price adjusted for dividend during the last six months up to and including 14 April 2021 of NOK 69.3.

 · P/B and P/E multiples at the top end of the range for the listed Nordic banks, reflecting Sbanken’s track-record, returns and high-quality loan book with low risk.

 · A price that is at a significant premium to broker forward price targets. The Offer Price will be reduced by the amount of any dividend or other distributions made by Sbanken.

Sbanken was established in 2000 as the first pure-play digital bank in Norway and was listed on the Oslo Stock Exchange in 2015. Sbanken is today positioned as one of the leading digital retail banks in Norway with 476,000 retail customers at year-end 2020.

The Company has had the most satisfied banking customers in Norway the last 19 years. In addition to a strong position within current accounts and mortgages, Sbanken also has a good position in the savings market with NOK 23 billion customers’ investments in mutual funds, built a position in the consumer finance market with NOK 1.7 billion in outstanding loans and launched several successful offerings in the SME segment with 8,000 customers at year-end 2020.

The loan book of Sbanken has low risk as 95% of Sbanken’s NOK 83 billion loan book consists of high-quality residential mortgages with a loan-to-value ratio of approximately 53% as of fourth quarter-end 2020 and an average loan loss ratio of 0.11% over the last four years.

DNB believes that Sbanken will further strengthen its position within retail banking in its home market. DNB’s market share within mortgages in Norway is estimated to increase from approximately 24% to approximately 27%. In addition, Sbanken will complement DNB within the savings area, which is a growth area for DNB, and add highly skilled technology resources.

The transaction is estimated to be accretive and positively impact earnings per share and return on equity of DNB. Cost synergies are expected to be realized within both Sbanken and DNB. The transaction is expected to reduce DNB’s CET 1 ratio with approximately 100 bps at completion of the Offer.


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