| Tue 5 Jun 2012, 7:05 | | MMI - MMI Holdings Limited - MMI acquires Momentum Short-Term Insurance from |
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MMI
MMI
MMI - MMI Holdings Limited - MMI acquires Momentum Short-Term Insurance from
Outsurance
MMI Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2000/031756/06
ISIN Code: ZAE000149902
JSE Share Code: MMI
NSX Share Code: MIM
("MMI" or "the Company")
MMI ACQUIRES MOMENTUM SHORT-TERM INSURANCE FROM OUTSURANCE
INTRODUCTION
Shareholders of MMI are advised that the Company, through its wholly-owned
subsidiary Momentum Group Limited ("Momentum"), entered into a binding sale of
shares agreement with OUTsurance Holdings Limited ("OUTsurance"), a subsidiary
of Rand Merchant Insurance Holdings Limited ("RMI") in terms of which Momentum
will, upon fulfilment of the suspensive conditions referred to below
("Suspensive Conditions"), acquire OUTsurance`s 50% shareholding in Momentum
Short-term Insurance Company Limited ("MSTI") ("Transaction"). Momentum already
owns the other 50% of the issued share capital of MSTI. MSTI conducts short-
term insurance business and provides personal and commercial lines cover to
individuals and business owners through a network of registered and/or
affiliated intermediaries.
SMALL RELATED PARTY TRANSACTION
RMI is a material shareholder of MMI for purposes of the Listings Requirements
of the JSE Limited ("JSE Listings Requirements") and therefore a related party
of MMI. OUTsurance, being a subsidiary of RMI, is therefore also a related
party of MMI as contemplated in section 10.1(b)(vii) of the JSE Listings
Requirements. As a result, the Transaction is categorised as a small related
party transaction in terms of section 10.7 of the JSE Listings Requirements.
THE TRANSACTION
Rationale
MMI`s vision is to be a leader in meeting financial services needs, both in
South Africa and selected countries in the rest of Africa. MMI is currently
underrepresented in the short-term insurance market in South Africa. Full
ownership and control of MSTI will enable MMI to effectively leverage its
shareholding in MSTI. The Transaction will allow MMI to closer align short-term
insurance products with its other products and optimise the use of MMI`s strong
intermediary-based distribution channels. MMI plans to create the necessary
intellectual property, skills and capacity within MMI to provide further growth
in the short-term insurance industry.
Terms of the Transaction
In terms of the Transaction, OUTsurance will dispose of its 50% shareholding in
MSTI to Momentum with effect from the fifth business day following the later of
(i) the date on which the last of the Suspensive Conditions has been satisfied,
and (ii) the date on which purchase price has been determined as set out below
("the Effective Date").
Purchase price
The purchase price payable by Momentum to OUTsurance in terms of the Agreement
shall be calculated by the auditors of MSTI in accordance with an agreed formula
based on the audited financial statements of MSTI for the financial year ending
30 June 2012 ("Purchase Price").
The Purchase Price will not exceed R150 000 000.00 and will be paid from
Momentum`s own cash resources.
Pro forma financial effects
The pro forma financial effects of the Transaction on MMI`s earnings per share,
headline earnings per share, net asset value per share and tangible net asset
value per share, based on MMI`s latest published interim financial results for
the 6-month period ended 31 December 2011, are insignificant as contemplated in
paragraph 9.15 of the JSE Listings Requirements.
SUSPENSIVE CONDITIONS
The Transaction is subject to the fulfilment or waiver of, inter alia, the
following Suspensive Conditions:
- the unconditional approval of the Transaction by the Registrar of Short-Term
Insurance and the South African competition authorities, or if such approvals
are conditional, each of Momentum and OUTsurance confirming their approval of
such condition(s) in writing;
- receipt of an exemption from the Takeover Regulation Panel in terms of the
Companies Act, 71 of 2008 ("Companies Act"), exempting Momentum and OUTsurance
from complying with the relevant provisions of the Companies Act and the
Takeover Regulations issued in terms of the Companies Act; and
- receipt of confirmation by the Company from an independent expert acceptable
to the JSE Limited ("JSE") confirming that the terms of the Transaction are fair
to the shareholders of the Company ("Fairness Opinion");
FURTHER ANNOUNCEMENT
In terms of section 10.7(b) of the JSE Listings Requirements, the Company is
required to provide the JSE with written confirmation from an independent expert
acceptable to the JSE, that the terms of the Transaction with OUTsurance, being
a related party, are fair as far as the shareholders of MMI are concerned.
The Company has engaged Deloitte & Touche to prepare the Fairness Opinion.
Following receipt of the Fairness Opinion, the Company will provide the JSE with
a copy thereof and will release a further announcement on SENS advising
shareholders of the finding in the Fairness Opinion. Assuming that Deloitte &
Touche found that the terms of the Transaction are fair to MMI shareholders, the
Fairness Opinion will lie for inspection at the Company`s registered office for
a period of 28 days from the date of the further announcement.
AMENDMENT OF THE MEMORANDUM OF INCORPORATION
Following the implementation of the Transaction, MSTI`s memorandum of
incorporation will be amended to conform to the requirements of Schedule 10 of
the JSE Listings Requirements and the Companies Act.
Centurion
5 June 2012
Legal Advisors to MMI, MSTI and Momentum
Webber Wentzel
Corporate Finance Advisors to MMI, MSTI and Momentum
Rand Merchant Bank (A division of FirstRand Bank Limited)
Sponsor to MMI in South Africa
Merrill Lynch South Africa (Proprietary) Limited
Sponsor to MMI in Namibia
Simonis Storm Securities (Proprietary) Limited
Date: 05/06/2012 07:05:01 Produced by the JSE SENS Department.
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