| Wed 16 Apr 2008, 8:30 | | ASA / ABSP - ABSA - Acquisition by ABSA Group of 5 |
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JSE ASA ABSP
ABSP AMAGB
ASA / ABSP - ABSA - Acquisition by ABSA Group of 50% plus one share of
Woolworths Financial Services (Proprietary) Limited and the establishment of a
joint venture
ABSA GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/003934/06)
ISIN Code: ZAE000067237
JSE share code: ASA
Issuer code: AMAGB
(Absa Group or Absa)
ABSA BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/004794/06)
ISIN Code: ZAE000079810
JSE share code: ABSP
(Absa Bank)
ACQUISITION BY ABSA GROUP OF 50% PLUS ONE SHARE OF WOOLWORTHS FINANCIAL
SERVICES (PROPRIETARY) LIMITED AND THE ESTABLISHMENT OF A JOINT VENTURE
1. INTRODUCTION
The directors of Absa are pleased to announce that Absa Group has entered
into an agreement with Woolworths (Proprietary) Limited (Woolworths) to
acquire 50% plus one share of the share capital of Woolworths Financial
Services (Proprietary) Limited (WFS), the financial services business of
Woolworths (the Transaction). The purchase price payable by Absa for 50%
plus one share of the issued share capital of WFS is R875 million, payable
in cash at completion.
2. RATIONALE
The Transaction, which will lead to the establishment of a joint venture
between Absa and Woolworths (the Joint Venture), will provide Absa with
access to customers in the retailer finance market at point-of-sale,
enabling Absa to increase its share of the consumer finance market in South
Africa.
Woolworths is a highly attractive retailer for Absa to partner with in
South Africa in view of its premier brand, distribution network (more than
200 corporate stores) and loyal customer base (4,5 million customers). At
31 December 2007, WFS had a net receivables book of R5 559 million,
including the receivables within the securitisation programme. WFS has 1,6
million customers collectively holding almost 2 million accounts.
The combination of Absa and Woolworths` know-how and resources will enable
WFS to become a market-leading consumer finance operation with one of the
most comprehensive financial services offerings in a South African retail
store network. The Joint Venture will leverage the combination of
Woolworths` distribution channels and significant customer base, and Absa`s
funding, credit risk, customer value management and product marketing
capabilities.
3. PRINCIPAL TERMS AND CONDITIONS
3.1 Conditions precedent
The Transaction is subject to the fulfilment of inter alia, the following
remaining conditions precedent before 30 September 2008:
- the internal restructure of WFS being completed so that WFS is the
beneficial owner of all financial services businesses within the wider
Woolworths group;
- the unconditional approval of the Transaction by the South African
Competition Authorities or approval on such conditions as are
reasonably acceptable to both Woolworths and Absa; and
- the execution of the remaining ancillary legal agreements necessary to
give effect to the Transaction.
3.2 Debt funding of WFS
Absa Bank will provide all required debt funding to WFS on a secured basis
with no recourse to Woolworths.
3.3 Effective date
The effective date of the Transaction is expected to occur during the
second half of 2008.
4. FINANCIAL EFFECTS
The Transaction is financially attractive to Absa, although the immediate
financial effect is below the disclosure threshold for earnings per share,
headline earnings per share, net asset value per share and tangible net
asset value per share in terms of the Listings Requirements of the JSE
Limited.
5. FURTHER ANNOUNCEMENT
Absa shareholders will be advised by way of a Sens announcement when all
the conditions precedent have been fulfilled and once completion has
occurred.
Johannesburg
16 April 2008
Enquiries
Doug Walker
Managing executive: Absa Card
+27(0)12 317 3848
E-mail: doug.walker@absa.co.za
Sponsor:
Merrill Lynch South Africa (Proprietary) Limited
Legal advisor:
Deneys Reitz
Date: 16/04/2008 08:30:01 Produced by the JSE SENS Department.
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