London-listed financial services and life assurance giant Old Mutual announced on Tuesday that Old Mutual South Africa (Omsa) has made an offer to acquire the remaining 49% of its 51%-held subsidiary Mutual & Federal Insurance Company for R17,50 per share.
Old Mutual said it had received an irrevocable undertaking from Luxembourg-based RSA Overseas Holdings, which has a 37,1% stake in Mutual & Federal, to support the offer.
“The transaction will occur by way of a scheme of arrangement between Mutual & Federal and its shareholders, which will be proposed by Omsa. The scheme will be subject to the approval of the shareholders of Mutual & Federal, the sanction of the High Court of South Africa and those regulatory approvals that are necessary.
“If the scheme is successful, the total consideration payable by Omsa is approximately R1,930-million. If the scheme is not successful then Omsa will make an offer to all shareholders to acquire their shares at the same price as proposed in the scheme. The follow-on offer will only be subject to regulatory approval, to the extent required.
“RSA has also irrevocably undertaken to accept this follow-on offer, should it be made, and has also waived the excess consideration above R15,25 per share, inclusive of the final dividend per share declared by Mutual & Federal,” Old Mutual said.
It added that it and RSA had entered into an agreement whereby RSA will pay to a bank, nominated by Old Mutual and acting as principal, a rand amount equal to the full consideration RSA receives under the scheme (or follow-on offer should it be made), together with any final dividend that RSA may receive from Mutual & Federal in respect of the 2003 financial year (collectively amounting to R1,387-million).
“Such bank will pay to RSA £100-million. Old Mutual will pay to the bank in [British] pounds, such consideration as may be agreed between Old Mutual and the said bank, and receive R1,387-million.”
Julian Roberts, group finance director of Old Mutual, said: “We have enjoyed a long and successful partnership with Royal & Sun Alliance in Mutual & Federal. RSA’s decision to divest its shareholding in Mutual & Federal provides an excellent opportunity for us to bring Mutual & Federal under the full control of Old Mutual.
“Under these circumstances, we believe this is best for the Mutual & Federal business, its customers and its staff and is evidence of our continuing commitment to our businesses in South Africa.”
Mutual & Federal is one of the leading insurance companies in Southern Africa, providing personalised short-term insurance services to the personal, commercial and corporate markets in South Africa, Namibia, Botswana, Malawi and Zimbabwe. — I-Net Bridge