OWN CORRESPONDENT and EMELIA SITHOLE, Johannesburg | Tuesday
PLANS to create South Africa’s second biggest financial services group through the union of black and Afrikaner capital have been scrapped amid doubts about the commercial viability of the merger, the companies said.
Life assurer Sanlam, Metropolitan Life Ltd and empowerment group New Africa Investments Ltd said the talks had also been hit by the sudden illness of Sanlam executive chairman Marinus Daling, which increased the risks of a successful merger.
”The companies have mutually agreed to discontinue their current discussions regarding the proposed merger of the financial services activities of the companies,” the companies said in a joint statement.
They said although due diligence investigations on Metropolitan Life (Metlife) and Sanlam were satisfactory, the commercial benefits of merging their financial services were not as compelling as initially expected.
The planned marriage of Metlife and Sanlam’s financial services would have produced a company with a market value of about R30bn and a 25% share of the South African insurance market – not far behind industry leader Old Mutual.
Analysts said the new entity would have represented the country’s first financial services group representing all sectors of the population.
The three companies said they remained ”firmly committed to the vision of further developing into truly South African services companies, with strong empowerment characteristics”.
They gave no further details, but advised shareholders that there was no longer any need to be cautious when dealing with securities of the companies.
Sanlam, established 80 years ago, is a household name in South Africa and would have had the clout to clinch deals that would have proved difficult for Nail to secure, analysts said.
By the same token, Nail’s majority stake in Metlife would have given Sanlam access to the country’s expanding black middle class, as well as government employees and unions members.
Nail has been engaged in a radical restructuring, centred on Metlife, following a share option scandal which hit the group last year. – Reuters