Old Mutual to wait one week for M&F decision
February 4, 2004
By Ann Crotty
Johannesburg - The independent subcommittee of the Mutual & Federal (M&F) board that was appointed to consider the merits of an Old Mutual offer to acquire the entire share capital of M&F, was expected to announce the results of its investigation next week to coincide with the release of M&F's financial 2003 results, a source close to the transaction said yesterday.
The subcommittee, which comprises the six independent members of the M&F board and is headed by chairman Ken Saggers, was established two weeks ago when Old Mutual announced its firm intention to make the offer.
The securities regulation code requires M&F to "obtain appropriate external advice on any offer", which it is not required to accept but must publish.
The subcommittee has been receiving submissions from minority shareholders, most of whom have criticised the R17.50 a share at which the offer has been pitched.
In terms of the Companies Act, a meeting to allow shareholders to vote on the offer can only be convened by the M&F board. In this instance it would only be convened if the subcommittee gave the board the appropriate recommendation.
Peter Bezuidenhout, the executive general manager of services at M&F, said that if the subcommittee "decides that this is not a fair and reasonable offer, then no scheme will be presented to the shareholders for their consideration".
But he added that Old Mutual had said that if the scheme was not presented to shareholders it would make a follow-on offer at the same price, which would not be conditional on any level of acceptance but only on the necessary regulatory approval.
On a related issue, the Securities Regulation Panel (SRP) has scrutinised a foreign exchange agreement between Old Mutual and Royal Sun Alliance (RSA) for a possible breach of rule 13 of the code, which prohibits "special deals with favourable conditions".
The agreement involves Old Mutual guaranteeing RSA £100 million for its 37 percent stake in M&F. RSA has given an irrevocable undertaking to accept the offer.
An SRP executive said that the agreement was scrutinised to ensure that the combined value of the cost of the forward cover and the R15.25 a share offered to RSA did not exceed the R17.50 a share being offered to the other shareholders.
The agreement did not represent any contravention of the SRP code.
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