| Thu 22 Dec 2005, 8:45 | | Absa/Barclays - Acquisition of the Branch business |
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Absa/Barclays - Acquisition of the Branch business of Barclays in South Africa
by Absa
ABSA GROUP LIMITED
Incorporated in the Republic of South Africa)
(Registration No. 1986/003934/06)
JSE Code: ASA
Issuer Code: AMAG
ISIN Code: ZAE000067237
("Absa" or "the Company")
BARCLAYS BANK PLC
(Registered in England)
(Registration No. 1026167)
("Barclays")
ACQUISITION OF THE BRANCH BUSINESS OF BARCLAYS BANK PLC IN SOUTH AFRICA BY ABSA
BANK LIMITED
1. Introduction
Further to the transaction contemplated in the circular to Absa
shareholders dated 20 May 2005, and the acquisition by Barclays of Absa
ordinary shares in the open market, Barclays now holds approximately 56% of
the issued Absa ordinary shares.
Shareholders are advised that Absa Bank Limited, a wholly owned subsidiary
of Absa, has entered into agreements with Barclays for the acquisition as a
going concern of the Barclays South African Branch Business (the
"Business") comprising the Barclays Capital South Africa business and the
Corporate and Business Banking business as carried on by the South African
branch of Barclays, together with related assets and liabilities (the
"Acquisition").
2. Salient Terms of the Acquisition
2.1 Purchase Consideration
The purchase consideration in respect of the Acquisition is R578
million which is based on the net asset value of the Business at 31
August 2005, and which will be adjusted to reflect the net asset value
of the Business at the effective date. The purchase consideration will
be settled in cash.
2.2 Transaction Structure
The transfer of assets and liabilities in respect of South African law
governed assets and contracts will take place by operation of section
54 of the Banks Act, 1990. The transfer of other assets and contracts
not governed by South African law has been dealt with on a contractual
basis.
2.3 Effective Date
The effective date of the Acquisition is the first day of the calendar
month following fulfilment of the suspensive conditions as set out in
paragraph 0 below which is expected to be on 1st January 2006.
2.4 Warranties and indemnities
The acquisition agreement contains warranties and indemnities which
are normal for a transaction of this nature.
3. Rationale for the Transaction
As previously announced to shareholders, both the Absa and Barclays Boards
support the vision of creating the pre-eminent bank in Africa and have
agreed in principle, subject to regulatory and such other approvals as are
required, to integrate on an arm"s length basis Barclays South Africa and
the other Barclays Africa Sub-Saharan businesses into Absa. The
Acquisition of the Business is the first such integration transaction.
4. Details of the Business Acquired
The Corporate and Business Banking portion of the Business focuses on
promoting the product range of debt originated in South Africa, specialised
property and project finance, as well as transactional banking to corporate
and business clients. Barclays Capital South Africa is part of Barclays
Capital, the investment banking division of Barclays and it provides a full
range of financing, investment and risk management products to its clients.
The Business has total assets of approximately R12,9 billion and employs
170 employees, who will be transferring to Absa Bank.
5. Pro Forma Financial Effects
The pro forma financial effects of the Acquisition on the financial results
of Absa for the six month period ended 30 September 2005 in respect of
earnings and headline earnings per share are positive but not significant
(being less than 3% in accordance with the definition of the Listings
Requirements of the JSE Limited ("JSE")) and has no effect in the case of
net asset value and net tangible asset value per share.
6. Related Party Transaction and Fair and Reasonable Opinion in terms of the
JSE Limited"s Listing Requirements
The Acquisition constitutes a "small related party transaction" in terms of
paragraph 10.7 of the Listings Requirements of the JSE due to Barclays
being the controlling shareholder of Absa. In terms of the Listings
Requirements of the JSE, a related party transaction requires that an
independent professional expert, acceptable to the JSE, must conclude that
the terms and conditions of the proposed Acquisition from Barclays are fair
and reasonable as far as the shareholders of Absa are concerned.
Accordingly, the Absa Board appointed NM Rothschild and Sons (South Africa)
(Proprietary) Limited ("Rothschild") to review the terms and conditions of
the Acquisition and report as to the fairness and reasonableness of the
terms and conditions of the Acquisition.
Rothschild, after considering the information made available by Absa and
Barclays, and after discussions with the respective management teams, is of
the opinion that the terms and conditions of the Acquisition are fair and
reasonable to Absa shareholders.
Rothschild"s opinion is available for inspection during office hours at the
registered address of Absa, namely 3rd Floor, Absa Towers East, 170 Main
Street, Johannesburg, 2001 in terms of the Listings Requirements of the JSE
for a period of 28 days from the date of this announcement.
7. Opinion of the Absa Board
The Absa Board (excluding the Barclays nominee directors) has considered,
inter alia, the recommendation of a Board Committee consisting of
independent directors, the opinion from Rothschild and the commercial
implications of the Acquisition in arriving at its opinion in respect of
the terms and conditions of the Acquisition. The Absa Board is of the
opinion that the terms and conditions of the Acquisition are fair and
reasonable to and in the interests of Absa shareholders as a whole.
8. Suspensive Conditions
The Acquisition is subject to the execution of all related documentation
and receipt of minor related approvals by 31 January 2006, or such later
date as may be agreed by the parties.
9. Wealth Management
Linked to the Acquisition, the small Barclays International Personal and
Premier sales team in South Africa will transfer to Absa Private Bank, a
division of Absa Bank.
10. Forward Looking Statements
This announcement contains certain forward-looking statements within the
meaning of Section 21E of the US Securities Exchange Act of 1934, as
amended and Section 27A of the US Securities Act 1933, as amended, with
respect to certain of the Barclays/Absa plans and its current goals and
expectations relating to the potential transaction described above. By
their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances, including, but not
limited to, domestic and global economic and business conditions, market
related risks such as changes in interest rates and exchange rates, the
policies and actions of governmental and regulatory authorities, changes in
legislation and the impact of competition, a number of which are beyond
Barclays/Absa control. As a result, actual future results may differ
materially from the plans, goals and expectations set forth in the forward-
looking statements.
JOHANNESBURG
22 December 2005
Merchant bank, transaction advisor and joint-sponsor to Absa
Absa Corporate and Merchant Bank
Lead sponsor to Absa
Merrill Lynch South Africa (Proprietary) Limited
Legal advisors to Absa
Webber Wentzel Bowens
Linklaters
Due Diligence Advisors to Absa
KPMG
Independent expert to Absa
NM Rothschild and Sons (South Africa) (Proprietary) Limited
Financial advisor to Barclays
Barclays Capital
Legal advisors to Barclays
Deneys Reitz Inc.
Clifford Chance
Date: 22/12/2005 08:45:29 AM Produced by the JSE SENS Department
