Old Mutual buys out M&F

Old Mutual buys out M&F

2009-10-14 10:34

Johannesburg - Old Mutual has taken further steps to entrench its grip on its South African assets with a buy-out offer to minority shareholders in short-term insurer Mutual & Federal (M&F).

The multi-national financial services group announced on Wednesday it will be buying up the remaining shares in issue in M&F for R1.8bn.

Old Mutual already holds about 73.5% of the stocks in issue.

It will acquire equity at a price of 2 125c per share - a 21.2% premium to the 30-day moving average up to October 13. The transaction will be settled with the issuing of new Old Mutual shares.

Commenting on the transaction, group CEO Julian Roberts said: "This is a major step towards driving value creation between our South African businesses, which is one of our key strategic priorities.

"We have identified specific business development opportunities and our increased ownership will enhance our ability to improve M&F's operational performance. It also removes any remaining uncertainty about the future of the business for staff and customers."

The move will not come as a surprise to the market, as speculation has been mounting that Old Mutual would take out the stake.

Since taking the helm in late 2008, Roberts has been on a mission to simplify the structure of the business. He has emphasised getting maximum return out of South African assets including M&F, Nedbank Group and Old Mutual South Africa, all of which have remained highly profitable throughout the financial crisis.

Old Mutual's share price was down 10c (0.8%) to 1 290c in early Wednesday trade.

- Fin24.com