Green light for Barclays` Absa bid would free R6bn for payout
Sanlam awaits Manuel verdict
March 4, 2005
By Sherilee Bridge-David
Johannesburg - Sanlam shareholders will have to wait for finance minister Trevor Manuel to decide whether Barclays will be allowed to buy a controlling stake in Absa before they find out if they will get a special dividend from the assurer.
Sanlam, which owns 21.2 percent of Absa, said yesterday that it would have about R6 billion in extra cash after the sale of its shares to Barclays. This may be paid back to shareholders by issuing a special dividend or used to buy shares back from those who hold them.
But shareholders may not have to wait too long. Bloomberg has quoted Manuel as saying that he would make a decision on the Barclays deal soon.
`I don`t want to give a date but the matter is under consideration and it shouldn`t be too long,` Manuel said.
If the Barclays bid, which was announced last September, is given the go ahead, it will be the first foreign bank to invest in one of the big four South African banks.
The interest shown by Barclays in Absa helped drive the local bank`s shares 78.61 percent higher last year.
Absa`s shares have been trading around the R79 mark. They were trading at R60.50 the day before it confirmed talks with Barclays last year.
The British bank has warned that its offer `may not be at a premium` to Absa`s reigning market price.
Johan van Zyl, the chief executive of Sanlam, said the insurer would certainly not be selling Absa below the current market price.
`We will be selling Absa at a price that not only makes sense to ourselves, but to everybody else,` Van Zyl said.
Speaking at the release of Sanlam`s annual results, Van Zyl said the group would `not let the money burn a hole in our pocket`.
He said shareholders would know where they stood by May at the latest.
Sanlam reported a 74 percent jump in net income from R1.9 billion to R3.3 billion for the year to December following a 54 percent rise in new business sales to almost R60 billion.
Headline earnings a share rose 31 percent to R1.17 from 89c a year ago and the group increased its annual dividend by 25 percent to 50c.
Also reporting this week, rival Old Mutual recorded a 67.7 percent jump in profit to R5.7 billion, and Liberty posted a 55 percent jump in profit to R1.8 billion.
But the market seemed disappointed. Sanlam`s shares fell 2.1 percent to R13.08 by noon, but regained 5c to close at R13.13.
Reuters cited traders saying that investors were disappointed by the small growth in embedded value, which grew R2.15 to R13.46 a share.
Bloomberg quoted Johnny Lambridis, an analyst at Citigroup`s Smith Barney unit, as saying that he expected embedded value of R13.91 a share.
Chris Steward of Investec Asset Management said the shortfall was mainly due to the expensing of share options and a lower-than-expected return from its investment portfolios.
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