Johannesburg - South Africa's biggest short-term insurer, Santam [JSE:SNT]
, is to acquire Sanlam Life Insurance's 68.75% stake in MiWay Group Holdings for R240m, the parties said on Wednesday.
The stake will be acquired through Swanvest 120, a wholly owned subsidiary of Santam, which will also acquire Sanlam Life's claims against MiWay as well as preference shares in Misty Sea Trading 267 held by Sanlam Life, with effect from January 1 2011.
Swanvest currently owns 31.25% of the issued ordinary shares in MiWay.
After the acquisition, Swanvest will own 100% of MiWay's issued ordinary shares.
The acquisition remains subject to the fulfilment (or waiver, where applicable) of certain conditions.
MiWay, through its wholly owned subsidiary MiWay Insurance Limited, is an authorised financial services provider and registered short-term insurer that offers a range of financial products and services directly to the consumer.
MiWay offers short-term insurance, motor warranty and credit life, and has long-term plans to extend its services to a comprehensive array of financial services.
MiWay will continue to conduct its business as a separate subsidiary of Santam with its own licence, brand, management, staff, IT systems, rating model and underwriting rules.
Sanlam will retain access to the MiWay structures to distribute other financial services products.
The acquisition follows the ratification on Wednesday by Sanlam of its decision to restructure and consolidate its South African short-term insurance business interests under Santam.
"This decision enables Sanlam [JSE:SLM]
to improve the coordination of its short-term insurance coverage across all consumer market segments, and enables Santam to enhance its overall leadership position in the short-term insurance market," Santam said.
It said the acquisition will be value-enhancing to shareholders and would enable profitable growth of Santam's market share.
Santam will finance the acquisition out of available resources.