Absa and Barclays: Vote on bid in June

Absa’s shareholders will vote for or against Barclays bid to buy 60% of Absa on June 13, Barclays chief executive for international retail and commercial banking, David Roberts, said on Monday.

“This is a compelling transaction. It’s good for Barclays, it’s good for Absa, it’s good for shareholders,” he said when formally tabling Barclays’ bid in Johannesburg.

“We believe in the future of South Africa. We have chosen to invest in South Africa because it’s an attractive market.
The growth opportunity in banking is striking,” he said.

The British bank is offering R82,50 a share, or R33-billion in total, with a R2 final dividend, Absa board chairperson Danie Cronje said.

Once the deal comes through, 2% of Absa’s workers will be retrenched over a four-year period.

The deal will inject massive cash into South Africa’s reserves and help expand the two banks’ reach in Africa, Cronje said, adding that “it will do wonders for our reserves”.

“The Absa board had met to consider the offer, and the board was unanimous in its decision to recommend the deal to its shareholders.

“In addition, Absa will be declaring its final dividend for the year to March 2005 of R2 per Absa share,” Cronje said.

The R82,50 will be payable in cash, and the dividend, to be paid out on June 27, is for the year ending March 2005.

Barclays is Britain’s third-largest bank by assets and Absa is South Africa’s fourth largest.

Cronje’s announcement comes a day after Minister of Finance Trevor Manuel granted regulatory approval for the deal to go ahead.

“We are delighted that the authorities have given the go-ahead for this landmark transaction,” Cronje said.

Barclays initially offered R79 a share, with a R1,80 final dividend, but speculation has been rife that Absa’s minority shareholders demanded a higher price.

Cronje said the deal will be carried out in two phases. Barclays will first acquire 32% of Absa’s shares and buy the remaining 28% later.

Sanlam and Remgro, Absa’s biggest shareholders, have already given their undertaking to sell their combined stake of 28% to Barclays. Sanlam owns 19% of Absa.

A further 35% of Absa’s shareholders have expressed their support of the deal, while 63% of the bank’s shareholders submitted written approval.

“The offer price represents a premium of 36,4% to the closing share price on September 22 2004 [the date prior to the first cautionary announcement] and an 8,5% premium to the closing price on April 22 2005, the date prior to the most recent detailed cautionary announcement,” Cronje said.

On June 13, Absa’s shareholders will meet to ratify the deal, and a South African court will approve it on June 21, with July 13 set for the deal’s conclusion.

Absa’s minority shareholders will have a chance to speak on the deal on June 13, Cronje said.

He welcomed Barclays’ offer, as have political parties, business and labour.

On Sunday, Manuel said South Africa’s “four-pillar” banking system, of which Absa is one pillar, will remain in place.

The other three pillars are Standard Bank, FirstRand and Nedbank.

When asked if another foreign bank will be allowed to buy a South African bank like Barclays did, he replied: “I think it’s important that we deal with this on a case-by-case basis.

“The only difference now is that the shareholding of Absa shifts to primarily foreign shareholders. But the four pillars remain in place. The character of Absa as a South African bank will remain in place.”—Sapa

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