| Thu 8 Mar 2007, 8:01 | | SLM - Sanlam - Voluntary Tender Offer |
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SLM
SLM
SLM - Sanlam - Voluntary Tender Offer
Sanlam Limited
Incorporated in the Republic of South Africa
(Registration number 1959/001562/06)
JSE share code: SLM
NSX share code: SLA
ISIN number: ZAE000070660
("Sanlam")
VOLUNTARY TENDER OFFER
HIGHLIGHTS
- Return of up to R2.7 billion to Sanlam ordinary shareholders by way of a
voluntary tender offer to acquire, through a wholly-owned subsidiary (the
"Sanlam subsidiary"), a maximum of 125 million Sanlam ordinary shares.
- Sanlam ordinary shareholders will be able to indicate the price (within
the specified price range) at which they would be willing to sell all or a
part of their holdings.
- Tenders will be accepted in the price range of R17.00 to R21.00
(inclusive) per Sanlam ordinary share in increments of R0.50 only.
- The voluntary tender offer is being structured using a strike price
mechanism i.e. successfully tendered Sanlam ordinary shares will all be
acquired at the strike price.
- The voluntary tender offer will be conditional on Sanlam shareholder
approval.
1. INTRODUCTION
Sanlam shareholders are advised that Sanlam proposes to return up to R2.7
billion to Sanlam ordinary shareholders by way of a voluntary tender offer.
The voluntary tender offer will be implemented through a specific
repurchase of Sanlam ordinary shares, the salient terms and conditions of
which have been set out in this announcement and full details of which will
be set out in a circular to Sanlam shareholders to be posted on or about 2
April 2007.
2. THE VOLUNTARY TENDER OFFER
2.1 Rationale
The Sanlam directors continue to review the balance sheet of Sanlam and its
subsidiaries and associated companies (the "Group") with a commitment to
maintaining an efficient capital structure.
Sanlam has conducted an analysis of the appropriate capital level for the
Group and the requirements of the individual Group operations taking into
account the optimal level of capital required to support the Group`s
insurance activities and making due allowance for all expected policyholder
commitments. Based on this analysis, the Sanlam directors have concluded
that the Group currently holds capital in excess of its requirements and
have accordingly decided to return capital to Sanlam ordinary shareholders.
Sanlam reviewed several options for returning capital to Sanlam ordinary
shareholders. For the purpose of a substantial return of up to R2.7
billion, the board has decided to implement the voluntary tender offer as
it believes this process benefits both shareholders and the Group. In
particular, the voluntary tender offer:
- is available to all ordinary shareholders irrespective of the size of
their shareholdings. Sanlam ordinary shareholders can individually decide
whether to participate or not and, if they do participate, to what extent.
There is no obligation to participate;
- enables Sanlam ordinary shareholders to exit their shareholding in an
inexpensive manner (i.e. without incurring trading costs); and
- assists Sanlam in enhancing the financial efficiency of the Group.
2.2 Terms of the voluntary tender offer
Subject to the fulfillment of the suspensive condition set out in paragraph
2.5 below, Sanlam offers to purchase Sanlam ordinary shares from all
accepting Sanlam ordinary shareholders on the following basis:
- Sanlam, through the Sanlam subsidiary, will purchase up to a maximum of
125 million Sanlam ordinary shares, representing 5.4% of Sanlam`s current
issued ordinary share capital.
- All Sanlam ordinary shareholders, recorded in the register as such on
the record date, may elect to tender their Sanlam ordinary shares in the
following ways -
(i) as a tender at a single price being one of the prices in the price
range; or
(ii) as tenders at different prices in the price range.
The total quantity of Sanlam ordinary shares tendered by a Sanlam ordinary
shareholder may not exceed the total number of Sanlam ordinary shares held
by such Sanlam ordinary shareholder on the record date.
Tenders must be expressed in increments of R0.50 per Sanlam ordinary share
from the minimum price.
- Sanlam ordinary shareholders do not have to tender any Sanlam ordinary
shares if they do not wish to do so.
- All successfully tendered Sanlam ordinary shares will be purchased by
the Sanlam subsidiary at the same price, being the strike price. The
strike price will be the lowest price per Sanlam ordinary share, as
determined by the Sanlam board, that will allow the Sanlam subsidiary to
purchase up to 125 million Sanlam ordinary shares, as are validly tendered
pursuant to the voluntary tender offer.
- All Sanlam ordinary shares tendered at prices above the strike price
will be rejected and will not be purchased by the Sanlam subsidiary.
- If the total number of Sanlam ordinary shares tendered exceeds 125
million, tenders will be accepted in the following order:
(i) first, all Sanlam ordinary shares tendered at a price below the strike
price will be accepted in full and purchased at the strike price; and
(ii) second, Sanlam ordinary shares that are tendered at the price that is
determined to be the strike price will be accepted pro rata to the total
number of Sanlam ordinary shares tendered at that price and purchased at
the strike price.
The maximum number of shares purchased pursuant to the tender offer in
total will not exceed 125 million Sanlam ordinary shares. Any fractions
will be adjusted using rounding principles.
- If the total number of Sanlam ordinary shares tendered is 125 million or
less, all Sanlam ordinary shares validly tendered will be accepted and
purchased at the strike price, being the highest price (within the
specified price range) tendered by any one Sanlam ordinary shareholder.
- Sanlam ordinary shares will be purchased free of commissions and dealing
charges.
2.3 Voluntary tender offer consideration
Tenders may be made in the price range of R17.00 to R21.00 (inclusive) per
Sanlam ordinary share.
The Sanlam board has declared a final dividend of R0.77 per Sanlam ordinary
share. Sanlam ordinary shares will trade ex dividend from Friday, 20 April
2007 and will trade ex the right to participate in the voluntary tender
offer on or about Monday, 7 May 2007. Sanlam ordinary shareholders who hold
Sanlam ordinary shares at the last day to trade for the dividend, being
Thursday, 19 April 2007, and dispose of Sanlam ordinary shares pursuant to
the voluntary tender offer will receive both a dividend of R0.77 and the
strike price per Sanlam ordinary share.
The minimum price represents a 4.7% discount and the maximum price a 17.7%
premium to the volume weighted average market price of Sanlam ordinary
shares traded on the JSE Limited for the five trading days preceding
Wednesday, 7 March 2007, being the last practicable date prior to
publication of this announcement less a dividend of R0.77 per Sanlam
ordinary share.
The minimum price represents a discount of 13.7% and the maximum price a
premium of 6.6% to the embedded value (excluding the dividend) as at 31
December 2006.
2.4 Funding of the voluntary tender offer
The voluntary tender offer consideration will be funded out of cash and
liquid assets of the Group.
2.5 Suspensive condition
The voluntary tender offer is subject to the condition that a special
resolution approving the repurchase of Sanlam ordinary shares from all
accepting Sanlam ordinary shareholders in terms of the voluntary tender
offer is passed by the requisite majority of Sanlam shareholders at a
general meeting ("general meeting") convened for the purpose of considering
and, if deemed fit, passing such resolution and such resolution is duly
registered.
2.6 Financial effects
The tables below set out the unaudited pro forma financial effects of the
voluntary tender offer for Sanlam shareholders based on a minimum and
maximum voluntary tender offer consideration and the assumptions set out in
the notes that follow the tables. The unaudited pro forma financial
effects are the responsibility of the Sanlam directors and have been
prepared for illustrative purposes only to provide information about how
the voluntary tender offer may have affected the financial position of
Sanlam ordinary shareholders on the relevant reporting date. Due to their
nature, the unaudited pro forma financial effects may not be a fair
reflection of Sanlam`s financial position after implementation of the
voluntary tender offer or of Sanlam`s future earnings.
Because the final strike price is unknown at the date of this announcement,
the tables below set out the financial effects of the tender offer assuming
that 125 million shares will be acquired at the minimum price of R17.00 per
Sanlam ordinary share and the maximum price of R21.00 per Sanlam ordinary
share.
Unaudited pro forma financial effects assuming the minimum price of R17.00
per Sanlam ordinary share as the strike price:
Audited before Unaudited Unaudited
the voluntary pro forma pro forma
tender adjustments after the
offer(1) voluntary
tender offer
Diluted earnings per share
(cents)(2)(3)
Net result from financial 116.6 6.9 123.5
services
Core earnings 151.7 6.1 157.8
Headline earnings 304.9 3.7 308.6
Basic earnings per share
(cents)(3)
Net result from financial 118.7 7.2 125.9
services
Core earnings 154.4 6.5 160.9
Headline earnings 310.4 4.1 314.5
Shareholders` funds after 37 491 (2 153) 35 338
adjusting for subsidiaries
at fair value (R million)
(4)
Net asset value per share 1 640 (5) 1 635
after adjusting for
subsidiaries at fair value
(cents)(4)
Net asset value per share 1 274 (26) 1 248
(cents)(4)
Tangible net asset value 1 075 (37) 1 038
per share (cents)(4)
Embedded value of 46 811 (2 153) 44 658
shareholders` funds (R
million)(4)
Embedded value per share 2 047 19 2 066
(cents)(4)
Return on embedded value 31.0 1.2 32.2
per share(%)
Weighted average number of 2 203.1 (125.0) 2 078.1
ordinary shares (million)
Diluted weighted average 2 243.1 (125.0) 2 118.1
number of ordinary shares
(million)
Adjusted shares issued at 2 286.7 (125.0) 2 161.7
end of period (million)
Notes:
1. Extracted from the audited published results of Sanlam for the year
ended 31 December 2006.
2. Based on basic earnings adjusted for shares still to be issued under
the Sanlam Share Incentive Scheme and the conversion of deferred shares to
the extent that conversion rights have vested.
3. For the purposes of calculating the pro forma basic and diluted net
result from financial services, core earnings and headline earnings per
Sanlam ordinary share for the year ended 31 December 2006, it was assumed
that -
a. the voluntary tender offer was effected on 1 January 2006;
b. pursuant to the voluntary tender offer, a total of 125 million Sanlam
ordinary shares were purchased for a total tender offer consideration of R2
125 million. In addition, estimated costs of R28 million (including stamp
duty) relating to the voluntary tender offer were incurred;
c. the tender offer consideration of R2 153 million was withdrawn from a
balanced portfolio;
d. core earnings decreased by R59 million, comprising the actual
investment income return of 2.7% after tax on the funds withdrawn; and
e. headline earnings decreased by R303 million, comprising the actual
investment return of 14% after tax on the funds withdrawn.
4. For the purposes of calculating the pro forma net asset value, net
tangible asset value and embedded value per Sanlam ordinary share, it was
assumed that -
a. the voluntary tender offer was effected on 31 December 2006; and
b. pursuant to the voluntary tender offer, a total of 125 million shares
were purchased for a total consideration of R2 125 million. In addition,
estimated costs of R28 million (including stamp duty) relating to the
voluntary tender offer were incurred.
Unaudited pro forma financial effects assuming the maximum price of R21.00
per Sanlam ordinary share as the strike price:
Audited before Unaudited Unaudited
the voluntary pro forma pro forma
tender adjustments after the
offer(1) voluntary
tender offer
Diluted earnings per share
(cents)(2)(3)
Net result from financial 116.6 6.9 123.5
services
Core earnings 151.7 5.5 157.2
Headline earnings 304.9 0.4 305.3
Basic earnings per share
(cents)(3)
Net result from financial 118.7 7.2 125.9
services
Core earnings 154.4 5.8 160.2
Headline earnings 310.4 0.7 311.1
Shareholders` funds after 37 491 (2 655) 34 836
adjusting for subsidiaries
at fair value (R million)
(4)
Net asset value per share 1 640 (28) 1 612
after adjusting for
subsidiaries at fair value
(cents)(4)
Net asset value per share 1 274 (50) 1 224
(cents)(4)
Tangible net asset value 1 075 (61) 1 014
per share (cents)(4)
Embedded value of 46 811 (2 655) 44 156
shareholders` funds (R
million)(4)
Embedded value per share 2 047 (4) 2 043
(cents)(4)
Return on embedded value 31.0 (0.2) 30.8
per share(%)
Weighted average number of 2 203.1 (125.0) 2 078.1
ordinary shares (million)
Diluted weighted average 2 243.1 (125.0) 2 118.1
number of ordinary shares
(million)
Adjusted shares issued at 2 286.7 (125.0) 2 161.7
end of period (million)
Notes:
1. Extracted from the audited published results of Sanlam for the year
ended 31 December 2006.
2. Based on basic earnings adjusted for shares still to be issued under
the Sanlam Share Incentive Scheme and the conversion of deferred shares to
the extent that conversion rights have vested.
3. For the purposes of calculating the pro forma basic and diluted net
result from financial services, core earnings and headline earnings per
Sanlam ordinary share for the year ended 31 December 2006, it was assumed
that -
a. the voluntary tender offer was effected on 1 January 2006;
b. pursuant to the voluntary tender offer, a total of 125 million shares
were purchased for a total tender offer consideration of R2 625 million. In
addition, estimated costs of R30 million (including stamp duty) relating to
the voluntary tender offer were incurred;
c. the tender offer consideration of R2 655 million was withdrawn from a
balanced portfolio;
d. core earnings decreased by R73 million, comprising the actual
investment income return of 2.7% after tax on the funds withdrawn; and
e. headline earnings decreased by R373 million, comprising the actual
investment return of 14% after tax on the funds withdrawn.
4. For the purposes of calculating the pro forma net asset value, net
tangible asset value and embedded value per Sanlam ordinary share, it was
assumed that -
a. the voluntary tender offer was effected on 31 December 2006; and
b. pursuant to the voluntary tender offer, a total of 125 million shares
were purchased for a total consideration of R2 625 million. In addition,
estimated costs of R30 million (including stamp duty) relating to the
voluntary tender offer were incurred.
3. SALIENT DATES AND TIMES
2007
Voluntary tender offer opens at 09h00 Monday, 16 April
Last day to lodge forms of proxy for the general Friday, 20 April
meeting by 10h00
General meeting to be held at 10h00 Tuesday, 24 April
Announcement of results of general meeting on SENS Tuesday, 24 April
Announcement of results of general meeting Wednesday, 25 April
published in the press
Registration of special resolution with the Wednesday, 25 April
Registrar of Companies
Announcement that the offer is unconditional Wednesday, 25 April
released on SENS
Announcement that the offer is unconditional Thursday, 26 April
published in the press
Last day to trade to participate in the voluntary Friday, 4 May
tender offer
Sanlam ordinary shares trade ex the voluntary Monday, 7 May
tender offer
Record date for purposes of participating in the Friday, 11 May
voluntary tender offer
Closing date of the voluntary tender offer at 12h00 Friday, 11 May
Results of the voluntary tender offer released on Monday, 14 May
SENS
Results of the voluntary tender offer published in Tuesday, 15 May
the press
Dematerialised shareholders` CSDP or broker Wednesday, 16 May
accounts updated by
Voluntary tender offer consideration settlement Monday, 21 May
date by
Certificates posted to certificated shareholders Monday, 21 May
who tendered their ordinary shares in terms of the
voluntary tender offer but whose entire holdings
were not repurchased, and not electing to
dematerialise their remaining ordinary shares by
Notes:
1. These dates and times are subject to change. Any such change will be
released on SENS and published in a newspaper of national circulation in
South Africa and Namibia.
2. All dates and times referred to in this document are South African
dates and times.
3. Share certificates may not be dematerialised or rematerialised between
Monday, 7 May 2007 and Friday, 11 May 2007, both days inclusive.
4. CIRCULAR TO SHAREHOLDERS AND GENERAL MEETING
A circular setting out the full details of the voluntary tender offer, and
including a notice of general meeting, will be posted to Sanlam
shareholders on or about 2 April 2007.
A general meeting of Sanlam ordinary shareholders will be convened on 24
April 2007 or a later date or time to which the general meeting may be
adjourned or postponed, for the purpose of considering and, if deemed fit,
passing with or without modification, the special resolution for the
specific repurchase of Sanlam ordinary shares in terms of the voluntary
tender offer.
Cape Town
8 March 2007
Financial adviser and transaction Attorneys
sponsor
Deutsche Securities Jowell Glyn & Marais
Date: 08/03/2007 08:01:57 Produced by the JSE SENS Department.
