Bank of Georgia Group PLC ("BOGG" or the "Group") announces the proposed acquisition of 100%. of a leading bank in Armenia, Ameriabank CJSC ("Ameriabank"), for approximately $303.6 million. This acquisition will significantly enhance the Group's presence and growth opportunities within a fast-growing and attractive market.
The Board and Management of Bank of Georgia Group PLC are pleased to announce that conditional agreement has been reached to acquire 100% of the total issued share capital of Ameriabank CJSC (the "Acquisition"). BOGG believes that significant value can be derived from capitalising on opportunities within Armenia through this acquisition of a leading Armenian bank and by leveraging BOGG's experience and expertise as it integrates Ameriabank into the wider Group (the "Enlarged Group"). The Acquisition is conditional upon the approval of the Group's shareholders and regulatory approvals.
Key highlights:
· The Group is set to acquire Ameriabank, a leading universal bank in Armenia, which has an attractive franchise, in an attractive market, with similar characteristics to Georgia.
· Significant upside potential from leveraging the Group's existing customer focus and digital/payments capabilities.
· Approximately $303.6 million cash transaction fully financed by surplus capital of the Group at an attractive valuation; maximising shareholder return while preserving the strong capital ratios of JSC Bank of Georgia ("JSC BOG"). Acquisition price of 0.65x net asset value as at 31 October 2023 and 2.6x P/E 2023.
· 90% of Ameriabank will be acquired upon completion of the Acquisition, with a 10% shareholding to be retained by the European Bank for Reconstruction & Development ("EBRD") subject to a Shareholders' (Put and Call Option) Agreement.
· No shareholder dilution expected for existing shareholders.[1] The Board and Management believe the Acquisition will be immediately EPS and RoAE accretive, with JSC BOG maintaining a strong capital position.
· It is intended that the BOGG Dividend and Capital Distribution Policy for the Enlarged Group, subject to trading and prospects being satisfactory, will remain unchanged with a target pay-out ratio in the range of 30-50% of annual profits
Mel Carvill, Chairman of the Board of Directors of Bank of Georgia Group PLC commented:
"This transaction is a significant milestone for the Group and a new chapter in our strategic development. Through Ameriabank we are set to enter Armenia, one of the fastest-growing economies in the region. Ameriabank has a well-regarded and experienced management team, and I am delighted that they will stay on after the transaction is closed.
The Board believes this transaction will enable the Group to substantially increase scale and unlock additional growth opportunities as our impressive results in digitalisation, payments and customer franchise growth can be applied to Ameriabank's further development. This transaction is immediately earnings enhancing, using the Group's existing cash resources, with no dilution for existing shareholders. The Board unanimously views it as an excellent opportunity to create more value for our shareholders."
Archil Gachechiladze, Chief Executive Officer of Bank of Georgia Group PLC commented:
"Today we announced the proposed conditional purchase of 100% of the shares in a leading universal bank in Armenia. Ameriabank is a growing and profitable bank, that is top of mind locally, with a strong customer franchise. We see Ameriabank as an attractive platform to increase scale and further grow our business by translating some of the successes that the Group has already delivered in the Georgian market. I would like to thank Ameriabank's team for their cooperation, and I look forward to working with them to unlock growth opportunities in one of the best-performing economies in the region."
Following the closing of the transaction and with Ameriabank on board, the Group also intends to change its name, marking a new chapter in its development, with two leading universal banks in attractive high-growth markets.
BOGG's Preliminary Results for the year-ended 31 December 2023 are expected to be published shortly after the BOGG General Meeting of Shareholders, to be held on 14 March 2024.
