Merkanti Holding CEO ‘disappointed’ by failed Sparkasse Bank acquisition

Merkanti Holding plc CEO Samuel Morrow has expressed his “disappointment” at the news that the company’s acquisition of Sparkasse (Holdings) Malta Ltd from Anteilsverwaltungssparkasse Schwaz has fallen through.

In a joint announcement on Monday, the two companies revealed that the agreement originally reached on 7th March 2022 will not go through.

When the agreement was first made, Merkanti Holding, the parent company of Merkanti Bank, had stated that it intended to acquire Sparkasse Bank with the intention of merging the two entities. The merger was planned to also contain a rename and rebrand in order to reflect the new brand’s focus and market footprint in “corporate banking, custody, depositary and investments services” in Malta and Ireland.

The transaction was originally expected to be closed in the second half of 2022, yet the forecast was then amended to the first half of 2023.

However, the two companies have now entered into an agreement to mutually terminate the original deal, with Merkanti Holding stating that the reason behind the termination “is not related to any aspect of the regulatory approval process but is related to timing and the change in global interest rate policy during this period”.

Merkanti Holding further clarified that the termination “will not materially impact” its financial results, yet it expects to impair “minor capitalised costs associated with the transaction” during the first half of 2023.

Commenting on the decision, Mr Morrow said: “Though we are disappointed with this update, we would like to thank everyone at Sparkasse (Holdings) Malta Ltd for their cooperation and wish them all the best in the future.”

The original deal was planned to be for a total consideration which is approximately equal to Sparkasse Holdings’ net tangible asset value, less certain adjustments. This included a cash payment at closing of the transaction, three consecutive annual payments of €2.5 million, as well as a contingent payment, payable upon the recovery of an asset of Sparkasse Bank which was previously written off in its entirety.

Merkanti Holding is a subsidiary of Scully Royalty Ltd, a Cayman Islands-registered company primarily involved in iron ore royalties. It operates as a public limited company in Malta and is the parent company of Merkanti Bank, a credit institution which is regulated by the Malta Financial Services Authority, primarily involved in corporate and merchant banking.

Founded in 2000, Sparkasse Bank is a company registered in Malta to carry out the business of banking, provide investment services and custody and depositary services, and is also authorised to act as a custodian of retirement schemes.