What Nedbank paid for: NCBA’s books, its price and the deals before it

On 3 November, 1.087 billion NCBA shares changed hands in a single block on the Nairobi Securities Exchange, and Nedbank became the owner of 66% of the Kenyan bank. It is Nedbank's first controlling stake in East Africa, where until now it had only a representative office, and the price has been argued over since the offer was made in January.

Nedbank's chief executive, Jason Quinn, has answered the critics with a line of his own: "value is in the eye of the beholder". That is true, and it is also not an answer. For anyone who owns shares in either bank, lends to banks in the region, or is weighing the next bank deal in SADC or East Africa, the useful question is narrower: what exactly did Nedbank buy, and was the price high for what it got?

We rebuilt the deal from the published record: the offer's own terms, NCBA's results set against Kenya's other listed banks, where NCBA's profit is made, a decade of East African bank acquisitions, and the price Nedbank accepted when it sold its stake in Ecobank a few months earlier.

The answer depends on which measure you use, and the measures disagree in a way that says a good deal about what Nedbank is really buying.