The board of challenger bank Aldermore has agreed to a £1.1 billion takeover by South Africa’s FirstRand.
The offer from the financial services firm, whose business interests range from investment and retail banking to asset management, will see it fork out 313p per share.
It represents a 22 per cent premium to Aldermore’s closing share price on October 12 and values the firm at £1.1 billion.
FirstRand said it aims to diversify Aldermore’s proposition in the UK, with the possible addition of services such as car financing, personal loans and insurance.
The offer is subject to a shareholder vote but the board has recommended investors back the deal.
In total Aldermore employs around 900 people, including more than 20 staff based in Leeds from which it runs its Scottish operations.
In an interview with The Yorkshire Post this Spring its boss Phillip Monks confirmed that it had plans to keep growing in Yorkshire.
Mr Monks said of the takeover: “The offer reflects our strong track record of delivery and FirstRand’s confidence in Aldermore to continue delivering on its sustainable growth strategy.
“With the backing of FirstRand Group’s considerable resources and wider capabilities, we will be able to accelerate the delivery of our strategy and further expand the products and services we offer customers.
“Our vision has always been to bring more competition to UK banking, and the support of the FirstRand Group will enable us to continue to do just that.”
FirstRand chief executive Johan Burger said: “We are very pleased that the Board of Aldermore, one of the UK’s leading specialist lenders, will be recommending our Offer. The transaction is the latest step in our strategy of protecting and building shareholder value by achieving a more diversified revenue profile and we believe it will provide the platform to fulfil our growth objectives in the UK. It will allow the FirstRand Group to allocate more financial resources to our operations in Africa, whilst diversifying earnings in the UK.
“The team at Aldermore have built a fantastic bank in a short period of time and we look forward to working closely with them to identify further growth opportunities.
“Aldermore, under the leadership of Phillip Monks, joins our multi-branded portfolio of leading financial services franchises; First National Bank, Rand Merchant Bank, WesBank and Ashburton Investments.
“FirstRand’s unique operating model and organisational culture empowers the management teams of these franchises to formulate and execute on their respective growth plans within the group’s strategic framework.
“This approach has resulted in a track record of superior growth and returns.
“In making this offer FirstRand carefully considered how current and potential macroeconomic future scenarios in the UK could impact the broader business.
“We are very comfortable that the financial impact of this transaction is supportive of FirstRand’s previous guidance to shareholders on growth, returns, capital position and dividend policy.”
Aldermore - which lends to small and medium-sized businesses, home-owners and landlords - also announced its third-quarter results, which saw net loans up 12 per cent to £8.4 billion, driven by £2.4 billion of new lending.
Customer deposits were up 8 per cent to £7.2 billion.