| Wed 6 Dec 2006, 15:31 | | Standard Bank - Acquisition by Liberty Group Limit |
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SBK
SBK
Standard Bank - Acquisition by Liberty Group Limited of Standard Bank"s
37.4% shareholding in Stanlib Limited
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1969/017128/06)
Share code: SBK
Namibian share code: SNB
ISIN: ZAE000057378
("Standard Bank")
ACQUISITION BY LIBERTY GROUP LIMITED OF STANDARD BANK"S 37.4%
SHAREHOLDING IN STANLIB LIMITED
INTRODUCTION
Liberty Group Limited ("Liberty Life") has approached Standard Bank to
acquire its 37.4% shareholding in STANLIB Limited ("STANLIB") ("the
transaction") and in addition has approached Quantum Leap Investments to
acquire its 25.2% shareholding in STANLIB. Standard Bank and Quantum Leap
Investments have both agreed with Liberty Life the terms of the proposed
acquisition of the 62.6% of STANLIB that Liberty Life does not already
own, which comprise inter-conditional agreements between Liberty Life and
each of Standard Bank and Quantum Leap Investments.
RATIONALE
Standard Bank and Liberty Life each own 37.4% of STANLIB. Standard Bank"s
interests in both Liberty Life and its direct and indirect interests in
STANLIB form part of the Standard Bank Group"s Investment Management and
Life Insurance operations.
Liberty Life now believes that it is essential that it directly controls
its own asset management business. Standard Bank is of the view that
Liberty Life"s acquisition of Standard Bank"s interest in STANLIB also
helps to achieve a more coherent group structure and align the asset
gathering businesses of the group within one business unit.
Standard Bank supports Liberty Life"s view that there has been a
significant market shift from on-balance sheet to off-balance sheet
investment products since the creation of STANLIB. Standard Bank is of
the opinion that this will help to address structural inefficiencies
within the Liberty group where both STANLIB and Liberty Life effectively
compete in the savings market. Furthermore, Standard Bank expects that
its investment in Liberty Life will increase in value in that Liberty
Life"s 100% ownership of STANLIB provides growth opportunities in both
product and distribution not available under the current structure.
INFORMATION ON STANLIB
STANLIB is an investment management, linked investment and collective
investment scheme business. STANLIB was formed in 2002 through the merger
of the asset management businesses of Liberty Life and Standard Bank. As
at 30 June 2006 STANLIB had over R296 billion of funds under management,
making it one of the largest managers of investments in South Africa.
The net asset value at 30 June 2006 and profits attributable to Standard
Bank"s direct investment in STANLIB for the six months ended 30 June 2006
of STANLIB were R687.1 million and R49 million, respectively.
RELATED PARTY TRANSACTION
In terms of the Listings Requirements of the JSE Limited ("the JSE"), the
transaction between Liberty Life and Standard Bank is classified as a
small related party transaction due to Standard Bank"s interests in both
Liberty Life and in STANLIB. The purchase consideration represents
approximately 0.8% of Standard Bank"s market capitalisation as at 1
December 2006.
Accordingly, Standard Bank has appointed JPMorgan Chase Bank N.A.
(Johannesburg Branch) ("JPMorgan") as an independent professional expert,
approved by the JSE, in relation to the transaction. JPMorgan"s opinion
is set out in paragraph 7 below.
FINANCIAL EFFECTS
The transaction will not have a significant effect on the net assets or
net tangible assets per share and earnings or headline earnings per share
of Standard Bank.
TERMS AND CONDITIONS OF THE TRANSACTION
The purchase consideration
The purchase consideration payable to Standard Bank is R935 190 887 and
will be settled by Liberty Life paying R384 494 507 in cash plus interest
at the rate of prime less 4% from 1 January 2007 until the implementation
of the transaction and issuing 7 246 005 Liberty Life shares ("the
consideration shares") to Standard Bank, credited as fully paid.
For the purposes of the transaction, the consideration shares have been
valued at R76 per share.
Standard Bank will not be entitled to any dividends declared by Liberty
Life on the consideration shares for the year ending 31 December 2006.
Standard Bank will use the cash received as a result of the transaction
to increase its pool of capital.
As a result of the transaction Standard Bank"s effective economic
interest in Liberty Life will increase to approximately 31.8% from 30.3%.
Effective date
The effective date of the transaction is 1 January 2007.
Conditions precedent
The transaction is conditional upon the fulfilment of the following
conditions precedent on or before 31 March 2007 (or such later date as
may be agreed between the parties in writing):
*all necessary regulatory approvals, including the approvals, if
required, of the Registrar of Banks, the Financial Services Board and the
Competition Authorities;
*the approval of the JSE of the listing of the consideration shares;
*STANLIB declaring to Quantum Leap Investments, Standard Bank and Liberty
Life in respect of the year ending 31 December 2006, the dividends
required to be paid out in respect of Quantum Leap Investments, Standard
Bank and Liberty Life"s share of the profits for the financial year
ending 31 December 2006;
*the Liberty Life shareholders approving all the resolutions required by
Liberty Life to implement the acquisition of the remaining 62.6% of the
ordinary shares in STANLIB that it does not already own;
*all of the relevant suspensive conditions in the sale agreement between
Quantum Leap Investments and Liberty Life having been fulfilled; and
*Liberty Life having declared its ordinary dividend to its ordinary
shareholders in respect of the period ending 31 December 2006 and that
dividend having accrued to those shareholders (Standard Bank is not
entitled to any ordinary dividend declared by Liberty Life for the period
ended 31 December 2006 in respect of the consideration shares).
OPINION
On 5 December 2006, JPMorgan delivered to the Standard Bank board of
directors its written opinion that, as of the date of the opinion and
based upon and subject to the factors and assumptions detailed in its
letter, the terms and conditions of the transaction are fair and
reasonable as far as the shareholders of Standard Bank are concerned.
The opinion of JPMorgan will lie for inspection at Standard Bank"s
registered office at 9th floor, Standard Bank Centre, 5 Simmonds Street,
Johannesburg, 2001, for a period of 28 days commencing on 6 December
2006.
Johannesburg
6 December 2006
Investment Bank
Standard Bank
Attorneys to Standard Bank
Bowman Gilfillan
Independent professional expert
JPMorgan Chase Bank N.A. (Johannesburg Branch)
Transaction Sponsor
J.P.Morgan Equities Limited
Legal advisor to Quantum Leap Investments
Routledge Modise Attorneys
Corporate and legal advisor to Quantum Leap Investments
Rabin and Associates (Pty) Ltd
Date: 06/12/2006 03:31:57 PM Produced by the JSE SENS Department
