| Mon 28 Jun 2010, 15:30 | | SNT - Santam Limited - Acquisition of the remainder of the issued share capital |
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SNT
SNT
SNT - Santam Limited - Acquisition of the remainder of the issued share capital
in Indwe Broker Holdings Group Limited not already held by Santam
SANTAM LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1918/001680/06)
Share Code: SNT
ISIN: ZAE000093779
("Santam" or "the Company")
ACQUISITION OF THE REMAINDER OF THE ISSUED SHARE CAPITAL IN INDWE BROKER
HOLDINGS GROUP LIMITED ("INDWE") NOT ALREADY HELD BY SANTAM
1 INTRODUCTION
Santam, Pamodzi Investment Holdings Limited ("Pamodzi") and Thebe Investment
Corporation (Pty) Limited ("Thebe") ("the Parties") have agreed in principle for
Santam to acquire Pamodzi`s and Thebe`s entire interests (held via subsidiaries
in the Pamodzi and Thebe groups, respectively) in Indwe ("the Transaction").
2 RATIONALE
Prior to implementing the Transaction, Santam owns 47.32% of Indwe`s issued
share capital. Pamodzi and Thebe currently each own 26.34% of Indwe`s issued
share capital. There are no other shareholders in Indwe.
Pamodzi and Thebe have decided to realign their respective investment portfolios
and approached Santam with a view to dispose of their interests in Indwe. In
order to protect its interests, Santam decided to purchase the Pamodzi and Thebe
shareholdings.
The Parties have agreed to enter into the Transaction on the terms and
conditions as set out in this announcement.
3 THE BUSINESS OF INDWE
Indwe, through its wholly owned subsidiary, Indwe Risk Services (Pty) Limited,
is a premier insurance brokerage offering tailor-made home, vehicle and business
insurance products through a network of 33 offices throughout South Africa and
representing in excess of 120 000 individual, commercial and corporate clients.
4 TERMS OF THE ACQUISITION
4.1 The Consideration
The consideration payable in terms of the acquisition is R263.4 million, R198.8
million of which is to be paid in cash and the balance of R64.6 million is to be
settled against outstanding preference shares held by Santam in subsidiaries in
the Pamodzi and Thebe groups following the fulfilment of the suspensive
conditions detailed below.
4.2 The Effective Date
The effective date of the Transaction is 1 September 2010 ("Effective Date").
4.3 Suspensive Conditions
The Transaction remains conditional upon the fulfilment of, inter alia, the
following suspensive conditions:
* Santam completing a due diligence review to its satisfaction;
* the Parties entering into the necessary legal agreements to execute
the Transaction; and
* the Parties obtaining the requisite statutory and regulatory approvals
pertaining to the Transactions.
5 UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The table below sets out the unaudited pro forma financial effects of the
Transaction on earnings per share ("EPS"), headline earnings per share ("HEPS"),
net asset value ("NAV") and net tangible asset value ("NTAV") per share based on
the published audited results of the Company for the year ended 31 December
2009.
The unaudited pro forma financial effects are the responsibility of the
directors of Santam and have been prepared for illustrative purposes only to
provide information about how the Transaction may have impacted shareholders on
the relevant reporting date and because of its nature may not give a fair
reflection of the Company`s financial position, changes in equity, results of
operations or cash flows after implementation of the Transaction or of the
Company`s future earnings.
Before the After the Percentage
Transaction Transaction Change
1
EPS (cents) 2 959.2 954.3 (0.5)
HEPS (cents) 2 906.0 901.1 (0.5)
NAV per share (cents) 3 4248.9 4248.0 0.0
NTAV per share (cents) 3 4122.2 3859.4 (6.4)
Weighted average number of 112.8 112.8 0.0
shares in issue (millions)
Number of shares in issue 112.9 112.9 0.0
(millions) 1
Notes:
1 The figures included in the "Before the Transaction" column have been
extracted, without adjustment, from the annual financial results of Santam
for the year ended 31 December 2009.
2 The effects on earnings and headline earnings per share are based on the
following assumptions:
* the Transaction was effective 1 January 2009
* equity accounted earnings from Indwe were removed and the earnings of Indwe
were consolidated in
* notional interest at 9.17% per annum, less the tax thereon, on the cash
component of the consideration payable has been forfeited
* preference dividends received on the preference shares settled have been
removed
* estimated transaction costs of R1 million were expensed
3 The effects on net asset value and net tangible asset value per share are
based on the following assumptions:
* the Transaction was effective 31 December 2009
* the equity accounted investment in Indwe was eliminated and the fair value
of the assets and liabilities of Indwe acquired were consolidated in
* estimated transaction costs of R1 million were expensed
6 SMALL RELATED PARTY TRANSACTION
In terms of the Listings Requirements of the JSE Limited ("JSE") ("Listings
Requirements"), the Transaction is regarded as a small related party transaction
as a director and the Chairman of Santam. Mr Vusi Khanyile, is also a director
and the Chairman of Thebe.
7 FAIRNESS OPINION
In accordance with paragraph 10.7 of the Listings Requirements, Santam is
required to provide the JSE with written confirmation from an independent
professional expert acceptable to the JSE that the terms of the Transaction are
fair to the Shareholders of Santam. In this regard, Santam has appointed One
Capital to provide an independent fairness opinion.
Bellville
28 June 2010
Sponsor
Investec Bank Limited
Independent Expert
One Capital
Date: 28/06/2010 15:30:01 Produced by the JSE SENS Department.
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