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OML
OLOML
OML - Old Mutual Plc - Proposal to acquire a controlling stake in
Nedbank Group
OLD MUTUAL plc
Issuer code: OLOML
JSE Share code: OML
NSX share code: OLM
ISIN: GB0007389926
PROPOSAL TO ACQUIRE A CONTROLLING STAKE IN NEDBANK GROUP
Introduction
Old Mutual plc ("Old Mutual") wishes to announce that it has received a
proposal from HSBC Holdings plc ("HSBC") to acquire a controlling
shareholding in Nedbank Group Limited ("Nedbank Group") ("the proposed
transaction" or "the proposal"). The proposal follows a detailed
review by Old Mutual Group of its various options with respect to its
shareholding in Nedbank Group.
The proposed transaction, if and when it proceeds, would be implemented
by way of a partial offer to all Nedbank Group shareholders to acquire
up to 70% of the Nedbank Group shares. The making of a binding offer
by HSBC is subject to a number of pre-conditions. In order to satisfy
these pre-conditions, a period of exclusivity has been granted by Old
Mutual Group to HSBC. Any acceptance by Old Mutual of any offer that
may be made would be subject, inter alia, to approval by Old Mutual`s
shareholders.
Old Mutual has had preliminary discussions with the South African
regulatory authorities about the merits of the transaction, but
recognises that these parties, as well as the Nedbank Group board, will
have to consider the merits of the proposed transaction. The relevant
parties will make the necessary formal applications in this regard in
due course.
There can be no certainty that the proposal which Old Mutual has
received from HSBC will lead to a transaction.
Rationale for the proposed transaction and benefits for Old Mutual
Group
The proposed transaction would represent a major step in delivering the
Old Mutual Group`s strategy as set out in March 2010 to reduce the
Group`s complexity whilst building a cohesive long-term savings,
protection and investment group by leveraging the strengths of the Old
Mutual Group`s capabilities in South Africa and beyond. The proceeds
would be partially reinvested in South Africa and partially in various
emerging markets via Old Mutual SA, as well as being applied to
meaningfully reduce existing Old Mutual Group debt.
Benefits for South Africa
Old Mutual believes that the proposed transaction, if implemented, is
likely to result in a material strengthening of South Africa`s
financial sector, foreign direct investment by HSBC in the banking
sector and material incremental investment by Old Mutual in the long-
term savings sector. Further benefits are expected to include an
improvement in the long term capital and current account inflows to
South Africa. Old Mutual also believes the proposed transaction would
enable it to increase its support in favour of South Africa`s national
objectives of broad-based black economic empowerment, job creation,
education, training and skills transfer.
Benefits for Nedbank Group
Nedbank Group`s initial assessment of the proposed transaction is that
HSBC represents an attractive international banking partner and
shareholder of reference and has the potential to provide Nedbank Group
with benefits which should enhance Nedbank Group`s ability to
strengthen its position in the South African banking sector. Nedbank
Group believes that there is a substantial opportunity for it to expand
both within the South African and African markets in due course.
Details of the process
The proposal contains a number of pre-conditions which it would be
necessary to satisfy prior to the partial offer being made, including
due diligence of Nedbank Group by HSBC, receipt of approval from the
South African Reserve Bank ("SARB") for the remittance outside South
Africa of a proportion of the disposal proceeds to be received by Old
Mutual, and a number of regulatory and other approvals such as the
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