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| Sunday, 03 August 2003 |
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Business |  |
| News Business Features Editorial
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DFCC completes acquisition of MERC The Board of Directors of National Mercantile Bank Limited (MERC) has informed the DFCC Bank that 90 per cent of the issued shares in MERC are available for purchase by DFCC at Rs. 2.65 per share, further to the announcement made on June 26, 2003. DFCC was to conclude the acquisition on August 1. The consideration payable by DFCC for the shares to be purchased is Rs. 59.625 million. Upon conclusion of the transfer of shares, the Board of Directors of MERC will be reconstituted to reflect the new ownership structure as well as facilitate the functional management arrangements that DFCC will put into effect to ensure that MERC and DFCC will mutually benefit from the strong franchise of DFCC. DFCC will also take immediate steps to re-capitalise MERC. The total capital infusion required by MERC is estimated at Rs. 456 million. Ninety per cent of this (Rs. 410.4 million) would be contributed by DFCC and the minority shareholders would be invited to contribute the balance (Rs. 45.6 million). If minority shareholders do not take up the offer, DFCC would invest an additional amount upto Rs. 45.6 million. The aggregate investment in MERC by DFCC would therefore range from Rs. 470.025 million to Rs. 515.625 million. Consequently, the goodwill arising from the acquisition would range from Rs. 245.025 million to (Rs. 265.625 million depending on the response from minority shareholders. Consistent with the accounting policy on goodwill amortisation hitherto adopted by DFCC, this goodwill would be written off equally over 60 months commencing August 1. |
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