United Kingdom banking group Barclays plc now owns approximately 56% of South African banking group Absa, the group said on Thursday. This follows the acquisition earlier this year and the purchase of shares on the open market.
In addition, Absa Bank Limited has entered into agreements with Barclays for the acquisition as a going concern of the Barclays South African Branch Business. This comprises the Barclays Capital South Africa business and the Corporate and Business Banking business as carried on by the South African branch of Barclays, together with related assets and liabilities.
The purchase consideration of R578-million will be settled in cash and the effective date of the acquisition is the first day of the calendar month following fulfilment of certain conditions.
The companies said in a statement that both the Absa and Barclays boards support the vision of creating the pre-eminent bank in Africa and have agreed in principle, subject to regulatory and such other approvals, to integrate on an arm’s-length basis Barclays South Africa and the other Barclays Africa sub-Saharan businesses into Absa.
The acquisition of the business is the first such integration transaction, they said.
The Corporate and Business Banking portion of the business focuses on promoting the product range of debt originated in South Africa, specialised property and project finance, as well as transactional banking to corporate and business clients. Barclays Capital South Africa is part of Barclays Capital, the investment banking division of Barclays, and it provides a full range of financing, investment and risk-management products to its clients.
The business has total assets of approximately R12,9-billion and employs 170 employees, who will be transferring to Absa.
The pro forma financial effects of the acquisition on Absa’s financial results for the six-month period ended September 30 2005 in respect of earnings and headline earnings per share are positive but not significant, they said.
The acquisition constitutes a “small related party transaction” in terms of the JSE’s listings requirements due to Barclays being the controlling shareholder of Absa. In terms of the JSE’s requirements, a related party transaction requires that an independent professional expert must conclude that the terms and conditions of the proposed acquisition from Barclays are fair and reasonable as far as the shareholders of Absa are concerned.
Accordingly, the Absa board appointed NM Rothschild and Sons (South Africa) to review the terms and conditions and report on the fairness and reasonableness of the terms and conditions of the acquisition.
Rothschild, after considering the information made available by Absa and Barclays, and after discussions with the respective management teams, is of the opinion that the terms and conditions of the acquisition are fair and reasonable to Absa shareholders.
The Absa board said it is of the opinion that the terms and conditions of the acquisition are fair and reasonable to and in the interests of Absa shareholders as a whole.
The acquisition is subject to the execution of all related documentation and receipt of minor related approvals by January 31 next year.
Linked to the acquisition, the small Barclays International Personal and Premier sales team in South Africa will transfer to Absa Private Bank. — I-Net Bridge