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Nedbank, Old Mutual reach milestone in managed separation

Apr 20 2018 19:06

Cape Town - Nedbank Group has signed a relationship agreement with Old Mutual Limited (OML), regarded by the group as a significant step forward in the managed separation of the Old Mutual Group.

Old Mutual Plc’s managed separation strategy involves the creation of a new South African holding company OML.

It is scheduled to have its primary listing on the JSE towards the end of June 2018 as well as a standard listing on the London Stock Exchange and secondary listings on the Malawian, Namibian and Zimbabwean exchanges.

The relationship agreement will govern how the two companies will work together - "on an arms-length basis" - after the listing of OML in South Africa.

OML will reduce its interest in Nedbank Group to a strategic minority holding of 19.9% about six months after OML’s listing on the JSE. It will achieve this by unbundling a portion of the shares it holds to its own shareholders on its register at that particular point.

The timing of the unbundling will depend on market conditions and the transitioning of the OML share register to a South African and emerging market focused and mandated investor base.

The exact number and value of Nedbank Group shares that each OML shareholder will receive as part of the unbundling will be determined by a number of factors at the time of the unbundling.

“Assuming the expected number of OML shares to be issued immediately after the listing and the current Nedbank Group shares in issue remain constant until the time of the unbundling, it is expected that for every 100 OML shares held, OML shareholders will receive approximately three ordinary shares in Nedbank Group,” Raisibe Morathi, Nedbank’s chief financial officer, said in a statement on Friday.

Morathi said the relationship agreement provides certainty on key aspects of the managed separation, and is an important step forward in concluding the unbundling process.

“We now have certainty on key elements of the relationship with OML that will inform how the two businesses operate commercially with each other going forward post the Nedbank Group unbundling.

"As expressed previously, Old Mutual Plc’s managed separation strategy is not anticipated to impact Nedbank and it is very much business as usual for Nedbank," said Morathi.

Nedbank group chief executive Mike Brown said the bank looks forward to continuing the strong and mutually beneficial relationship with Old Mutual in South Africa and in Africa.

“The unbundling of the majority of OML’s stake in Nedbank approximately six months after the listing of OML on the JSE will improve our free float on the JSE from less than 45% to approximately 80%, and is likely to attract additional index funds as shareholders of the bank,” said Brown.

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