| Mon 8 Mar 2004, 17:59 | | MUTUAL & FEDERAL INSURANCE COMPANY LIMITED - FIRM |
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MUTUAL & FEDERAL INSURANCE COMPANY LIMITED - FIRM INTENTION BY OLD MUTUAL (SOUTH
AFRICA) LIMITED ("OMSA") TO MAKE AN OFFER TO ACQUIRE THE ENTIRE ISSUED SHARE
CAPITAL OF MUTUAL & FEDERAL AND FURTHER CAUTIONARY ANNOUNCEMENT
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1970/006619/06)
Share code JSE: MAF Share code NSX: MTF
ISIN: ZAE000010823
("Mutual & Federal")
FIRM INTENTION BY OLD MUTUAL (SOUTH AFRICA) LIMITED ("OMSA") TO MAKE AN OFFER TO
ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF MUTUAL & FEDERAL AND FURTHER
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
On Tuesday, 20 January 2004, OMSA announced its (or its nominee"s) firm
intention to propose a scheme of arrangement between Mutual & Federal and its
shareholders other than M&F Investments (Proprietary) Limited ("M&F
Investments"), a wholly-owned subsidiary of OMSA, which, if implemented, would
result in Mutual & Federal becoming a wholly owned subsidiary of OMSA. In terms
of the scheme the listing of the Mutual & Federal shares on the JSE Securities
Exchange South Africa and the Namibian Stock Exchange would be terminated.
It was also announced that RSA Overseas Holdings (Luxembourg) (No 1) S.a.r.l
("RSA"), which owns 37.1% of the issued share capital of Mutual & Federal, had
irrevocably undertaken in terms of an agreement concluded with OMSA on 19
January 2004, to vote in favour of the scheme in respect of all the Mutual &
Federal shares that it owns.
It was also announced that if the scheme should not be proposed or not be
successful, OMSA (or its nominee) would immediately make a follow-on offer to
acquire all of the issued shares in Mutual & Federal other than those already
held by M&F Investments ("the substitute offer"). The cash consideration under
the substitute offer would be the same as the consideration offered under the
scheme, if proposed. The substitute offer was not subject to a minimum level of
acceptances.
RSA irrevocably undertook, in respect of all of the shares that it owns in
Mutual & Federal, to accept the substitute offer, should it be made, and to
waive the excess consideration on the basis as set out in paragraph 4.2 below.
2. OPINION AND RECOMMENDATIONS
2.1 Immediately upon receipt of the firm intention offer, the board appointed an
independent sub-committee to consider the terms of the offer and to make a
recommendation to the board. The sub-committee appointed Rand Merchant Bank, a
Division of FirstRand Bank Limited, ("RMB") acting as independent advisor to the
independent sub-committee, to furnish an opinion in relation to the terms and
conditions of the offer.
2.2 RMB has considered the terms and conditions of the offer and is of the
opinion that they are not fair and reasonable to Mutual & Federal shareholders.
RMB has advised the independent sub-committee accordingly.
2.3 The independent sub-committee has considered the terms of the offer, taking
into account the independent opinion of RMB, and is of the unanimous opinion
that the terms and conditions are not fair and reasonable to shareholders. The
independent sub-committee has accordingly recommended to the Mutual & Federal
board that the board should not recommend the offer, and accordingly should not
propose the scheme to shareholders.
2.4 The Mutual & Federal board (other than those who are also directors of Old
Mutual plc, OMSA, Old Mutual Life Assurance Company (South Africa) Limited, RSA,
and the directors appointed by any of such shareholders, who have recused
themselves from expressing such an opinion) has considered the terms of the
offer and, taking into account the opinion of RMB and the independent sub-
committee, is of the opinion that the terms and conditions thereof are not fair
and reasonable to shareholders. The board has accordingly decided not to
recommend the offer to its shareholders, and not to propose the scheme to
shareholders.
3. SUBSTITUTE OFFER
As the Mutual & Federal board will not be proposing the scheme, OMSA will be
required to make the substitute offer. Accordingly, OMSA or its nominee will be
required to post the substitute offer circular containing the details of the
substitute offer to shareholders as soon as is practically possible.
4. THE CONSIDERATION
4.1 The consideration to be offered by M&F Investments in terms of the
substitute offer is an amount of 1 750 cents per share in cash, less the final
dividend declared by Mutual & Federal in respect of the 2003 financial year,
payable to shareholders on the register on 19 March 2004. As the substitute
offer last date to trade will, in all likelihood, be after the dividend record
date, the offer consideration is 1 702 cents per share in cash.
4.2 RSA has agreed that to the extent that the consideration exceeds 1 477 cents
per share (1 525 cents less the final dividend of 48 cents referred to in 4.1
above), it will waive such excess amount in respect of all of the shares that it
owns under the substitute offer.
5. FURTHER CAUTIONARY ANNOUNCEMENT
Mutual & Federal shareholders are advised to continue to exercise caution when
dealing in their Mutual & Federal shares until a further announcement is made.
Johannesburg
8 March 2004
Investment bank, transaction Independent advisor to Mutual
advisor and joint sponsor to & Federal
Mutual & Federal Rand Merchant Bank
Nedbank Corporate
Legal advisors to Mutual & Joint Sponsor to Mutual &
Federal Federal
Webber Wenzel Bowens Merrill Lynch
