| Wed 14 Oct 2009, 10:11 | | MAF - Mutual & Federal - Announcement of a firm intention by old mutual plc to |
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MAF
MAF
MAF - Mutual & Federal - Announcement of a firm intention by old mutual plc to
make an offer to acquire those Mutual & Federal ordinary shares not currently
beneficially owned by OLD Mutual and/or its subsidiaries
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1970/006619/06
Share code JSE: MAF NSX: MTF ISIN: ZAE000010823
("Mutual & Federal")
ANNOUNCEMENT OF A FIRM INTENTION BY OLD MUTUAL PLC ("OLD MUTUAL") TO MAKE AN
OFFER TO ACQUIRE THOSE MUTUAL & FEDERAL ORDINARY SHARES NOT CURRENTLY
BENEFICIALLY OWNED BY OLD MUTUAL AND/OR ITS SUBSIDIARIES ("OLD MUTUAL GROUP")
1 Introduction
Mutual & Federal shareholders are advised that Old Mutual, which currently
holds, directly and indirectly, approximately 73.5% of Mutual & Federal
ordinary shares, has submitted to the board of directors of Mutual &
Federal ("the Board") a notice of its firm intention to make an offer to
Mutual & Federal shareholders to acquire the remaining shares in Mutual &
Federal`s ordinary share capital not currently beneficially owned by the
Old Mutual Group ("Minority Shareholding") ("the Offer").
2 Terms and mechanism of the Offer
Old Mutual is proposing to acquire the Minority Shareholding, by way of a
scheme of arrangement ("Scheme") in terms of section 311 of the Companies
Act, No. 61 of 1973, as amended ("the Companies Act"), subject to the
fulfillment of the conditions precedent in paragraphs 7 and 8 below. The
Offer has been based on an offer price of R21.25 per Mutual & Federal
ordinary share ("Take-Out Price") which Old Mutual intends to settle by way
of an issue of new Old Mutual ordinary shares ("Scheme Consideration").
The number of new Old Mutual ordinary shares which will constitute the
Scheme Consideration will be based on the Take-Out Price and the 30-day
volume weighted average price ("VWAP") of Old Mutual`s ordinary shares
traded on the JSE Limited ("JSE"), at the last practicable date prior to
the printing of the Scheme document to be posted to Mutual & Federal
shareholders. Based on the Take-Out Price of R21.25 per Mutual & Federal
ordinary share and the 30-day VWAP of Old Mutual ordinary shares as at the
close of business on 13 October 2009 (being the last practicable date prior
to the date of this announcement), of R11.87 per Old Mutual ordinary share,
the Scheme Consideration translates into an indicative exchange ratio of
1.79 Old Mutual ordinary shares per Mutual & Federal ordinary share.
Mutual & Federal`s various broad-based black economic empowerment entities
and its management and staff share scheme trusts ("Staff Trusts"), (jointly
"Trusts"), will form part of the Scheme and will therefore also receive Old
Mutual ordinary shares as Scheme Consideration. The documentation relating
to the Trusts will be amended as may be required, and in the case of some
of the Staff Trusts, with, inter alia, the approval in a general meeting of
Mutual & Federal shareholders ("General Meeting"), in order to allow them
to participate in the Scheme, to allow them to exercise their voting rights
in whatever manner they deem fit and for them to be able to hold Old Mutual
ordinary shares in substitution for Mutual & Federal ordinary shares in the
event that the Scheme is sanctioned and implemented ("the Trust
Amendments").
The Scheme Consideration results in the following premiums being paid to
Mutual & Federal`s shareholders:
Mutual & Federal`s share price as at 13 Premium based on
October 2009: the Take-Out Price
Based on closing price of R17.75 19.7%
Based on 30-day VWAP of R17.54 21.1%
The Offer is made on the basis that Mutual & Federal shall be entitled to
make dividend payments to Mutual & Federal shareholders in the normal
course on the same basis as dividends have been calculated and paid
historically ("Normal Dividends"). Should Mutual & Federal declare Normal
Dividends after the date of the Offer but before the actual date on which
payment is made of the Scheme Consideration in terms of the Scheme ("the
Actual Payment Date"), the aggregate Scheme Consideration will be adjusted
downwards by an amount equal to the total amount of such dividends to be
paid to the Mutual & Federal shareholders on the date of the declaration of
the dividend plus the total amount of the Secondary Tax on Companies
payable by Mutual & Federal on the total amount of the relevant Normal
Dividends.
3 Old Mutual`s rationale for the Offer
3.1 The Offer is part of Old Mutual`s focus on driving value creation and
optimising internal efficiencies throughout the Old Mutual Group; and
3.2 The Offer will unlock capital synergies and leverage additional
capabilities throughout the Old Mutual Group.
4 Fairness opinion
JPMorgan Chase Bank N.A., Johannesburg Branch ("JP Morgan") has been
appointed by the Board in terms of Rule 3.1 of the Securities Regulation
Code on Takeovers and Mergers and Rules of the Securities Regulation Panel
("SRP") ("SRP Code") to advise the Board on the financial terms of the
Offer. JP Morgan`s opinion will be made known to shareholders in due
course.
5 Shareholder support
Old Mutual has received irrevocable undertakings from Mutual & Federal
ordinary shareholders holding, in aggregate, 22.5% of the Minority
Shareholding, whereby they have undertaken to vote in favour of the Offer
at the Scheme meeting and all resolutions to be proposed at the General
Meeting, subject to the Trust Amendments being made.
Further details of these Mutual & Federal shareholders with regards to
their shareholding in Mutual & Federal are disclosed below:
Number of As % As %
Mutual & shareholding shareholding
Federal in Mutual & in the
ordinary Federal Minority
shares held ordinary Shareholding
share
capital
WIPHOLD Financial 16 690 569 5.23% 19.71%
Services Number
Three Trust
Mtha Financial 2 364 195 0.74% 2.79%
Services Trust
Total 19 054 764 5.97% 22.50%
6 Special arrangements
No arrangements exist between Old Mutual, Mutual & Federal, or any parties
acting in concert with Old Mutual or with Mutual & Federal in relation to
the Offer.
Similarly, there have been no dealings in relation to the Offer between Old
Mutual, Mutual & Federal, or any parties acting in concert with Old Mutual
or with Mutual & Federal.
7 The Offer Conditions
The Offer is subject to the fulfilment or waiver (where appropriate) of,
inter alia, the following conditions ("the Offer Conditions") -
7.1 by no later than the date of the issue of the Scheme circular, a
statement is made by the majority of the directors of Mutual &
Federal,entitled to vote and who are not conflicted,that, given the
circumstances and market conditions prevailing at the date of the
Offer -
7.1.1 they have considered the terms and conditions of the Offer and at the
time of such statements they are, given the circumstances and market
conditions at the time and the opinion by JP Morgan, satisfied with
the terms and conditions of the Offer;
7.1.2 they intend to support the Offer and to facilitate the Scheme to the
extend that a board of directors will normally be required for
purposes of the implementation of a scheme;and
7.1.3 they intend to recommend that Scheme members vote in favour of the
Scheme;
7.2 no dividend or similar payment other than the Normal Dividends will be
declared between the date of the Offer and the Actual Payment Date;
7.3 the approval, in general meeting of Mutual & Federal shareholders, of
the Trust Amendments and the Trust Amendments have been made and have
become unconditional; and
7.4 the terms and conditions of the unexercised Mutual & Federal share
options and unvested Mutual & Federal Restricted Share Plan ("RSP")
share awards issued under the Staff Trusts are amended such that the
vesting dates, exercise dates, delivery dates and/or restricted
periods of these share options and RSP share awards are not affected
by the Scheme and are not exercisable or deliverable, or cease to have
restricted periods applying to them, on the operative date of the
Scheme, but that their present vesting dates, exercise dates, delivery
dates and/or restricted periods will continue to apply, as if the
Scheme was not proposed or implemented.
Old Mutual will be entitled to waive any one or more of the Offer
Conditions or part thereof upon written notice to that effect to Mutual &
Federal prior to the date of the fulfilment of the relevant Offer
Condition. The date for fulfilment is based on the Scheme meeting being
held by no later than 23 November 2009.
Old Mutual will be entitled to extend the date of the fulfilment of any of
the Offer Conditions, by 30 days in its own discretion upon written notice
to that effect to Mutual & Federal, but shall not be entitled to extend the
date to a date later than the aforesaid 30 day period, without the written
consent of Mutual & Federal.
8 The Scheme Conditions
The Scheme will be subject to, and will become operative on the relevant
operative date upon, the fulfilment or waiver (where appropriate) of the
following conditions ("Scheme Conditions"), inter alia:
8.1 the Scheme having been approved, sanctioned and registered as provided
in the Companies Act;
8.2 no dividend or similar payment other than the Normal Dividends having
been declared between the date of the Offer and the Actual Payment
Date;
8.3 an independent party appointed by Old Mutual certifying on or before
the last date for the lodgement of the forms of proxy in respect of
the Scheme meeting ("the Proxy Date") that, as at the date of such
statement (which shall be dated the date before the Proxy Date) there
have not -
8.3.1 occurred any suspension or limitation of trading in
securities generally (for reasons other than information
technology or administrative disruptions) on the JSE;
8.3.2 been declared any banking moratorium by the relevant
authority in the Republic of South Africa;
8.3.3. occurred any change in the South African financial or
economic conditions or currency exchange rates or exchange
controls as would absolutely preclude the implementation of
the Scheme; or
8.3.4 occurred any declaration by the Republic of South Africa of
a national emergency or war or other calamity or crisis the
effect of which would absolutely preclude the implementation
of the Scheme;
8.4 prior to the date on which the Scheme is sanctioned, Mutual & Federal
has not, except in pursuance of a contract entered into earlier,
undertaken any of the actions referred to in Rule 19 of the SRP Code,
without the prior written consent of the SRP and of Old Mutual, which
consent shall not unreasonably be withheld or delayed; and
8.5 the receipt of, inter alia, all the necessary regulatory approvals in
respect of the implementation of the Scheme (either unconditionally or
subject to conditions acceptable to the party on whom the condition
will be enforceable).
Having taken legal advice, Mutual & Federal is of the view that the
approval of the competition authorities in South Africa is not required.
Old Mutual will be entitled to waive the Scheme Conditions set out in
paragraphs 8.3 and 8.4 upon written notice to that effect to Mutual &
Federal prior to the date of the fulfilment of the relevant Scheme
Condition.
Old Mutual will be entitled to extend the date of the fulfilment of any of
the Scheme Conditions, by 30 days in its own discretion upon written notice
to that effect to Mutual & Federal, but shall not be entitled to extend the
date to a date later than the aforesaid 30 day period, without the prior
written consent of Mutual & Federal.
9 Board of directors of Mutual & Federal
The Board has convened a sub-committee of independent directors to consider
the Offer. The Board, after considering the opinion of JP Morgan and the
recommendations of the sub-committee, will advise shareholders of their
recommendation in due course.
Johannesburg
14 October 2009
Investment bank, transaction Corporate law Independent Expert
advisor and transaction advisors
sponsor
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Nedbank Capital, a division of Edward Nathan JP Morgan
Nedbank Limited Sonnenbergs
Date: 14/10/2009 10:11:30 Produced by the JSE SENS Department.
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