Diamond Bank PLC confirmed reports that it has reached an agreement to merge with Nigerian peer Access Bank PLC.

Shares in both lenders were up more than 9% at the close of trading in Nigeria on news of the deal, which will create the largest retail bank in Nigeria and Africa by customers. The deal is expected to complete in the first half of 2019, Diamond Bank said.

Access Bank will acquire the entire issued share capital of Diamond Bank, whose shareholders will receive 3.13 Nigerian naira per share, comprising 1.00 naira per share in cash and 2 new Access Bank ordinary shares for every 7 Diamond Bank ordinary shares, according to a Dec. 17 press release.

The offer represents a premium of 260% to the closing market price of 87 kobo per share of Diamond Bank on the Nigerian Stock Exchange on Dec. 13, the date of the final binding offer.

Diamond Bank will be absorbed into Access Bank and it will cease to exist under Nigerian law upon completion of the merger. The current listing of Diamond Bank's shares on the NSE and the listing of Diamond Bank's global depositary receipts on the London Stock Exchange will also be canceled once the merger becomes effective.

Exotix Capital acted as international financial adviser to Diamond Bank, while Templars served as Nigerian legal counsel.

Diamond Bank in November denied media reports that it was in merger talks with Access Bank. The agreement also came after Diamond Bank secured approval from Nigeria's central bank to operate as a national bank, subject to the completion of the sale of unit Diamond Bank UK.

As of the second quarter, Diamond Bank and Access Bank had total assets of 1.59 billion naira and 4.37 billion naira, respectively, according to S&P Global Market Intelligence data.

As of Dec. 14, US$1 was equivalent to 364.50 Nigerian naira.