| Mon 27 Jun 2005, 11:41 | | Barclays buys up Absa, but still short of target |
|
Barclays buys up Absa, but still short of target
Stephen Gunnion
--------------------------------------------------------------------------------
E-Mail article Print-Friendly
Financial Services Editor
BARCLAYS has been buying up all available Absa shares in the market, but due to a shortage of Absa stock in the market the UK bank is still expected to fall short of the 56,5% it wants in Absa before its offer for the bank closes.
Last week Barclays asked the Johannesburg High Court to postpone its application as it had built up a stake of only 51,1% in Absa.
It needs at least 56,5% in the bank to retain majority control once AbsaÆs empowerment partners exercise their options to buy a 10% stake in the bank.
Through a scheme of arrangement, which was approved by shareholders earlier this month, Barclays will buy 32% of all shareholdersÆ stock in Absa. It has also received commitments from Sanlam and Remgro, AbsaÆs two largest shareholders, to tender all their shares under a voluntary offer aimed at building up a 60% shareholding in the bank.
However, AbsaÆs other large shareholders, mostly institutions, are reluctant to sell more than the 32% minimum.
Between Monday and Friday last week, Barclays bought 4,4-million Absa shares at an average of R82 a share, valuing its purchases at about R360m. However, this is less than 1% of the 666,8-million Absa shares in issue.
If Barclays does not reach a level of ownership it is satisfied with, it can still call the whole deal off. However, analysts do not expect this to happen.
Neville Chester, banks analyst at Coronation Fund Managers, said Barclays would probably not reach the 56,5% it needed before July 5, when the court is expected to sanction the deal.
ôIt is unlikely just given the average volume of shares available,ö Chester said. ôI donÆt think they will get to 56,5%, but I donÆt think that is the be all and end all.ö
He said more shares could become available once the scheme had ended. With the Absa share price trading below the R82,50 offer price, Chester said there was little reason for shareholders to sell stock. While the offer is open, Barclays cannot buy Absa shares on the market above the R82,50 offer price without raising its offer to all shareholders.
Even if Barclays did not reach its target, Chester said it would probably still carry on buying shares in Absa.
