Minority owners to fight Mutual &Federal takeover

JOHANNESBURG – Minority shareholders in South Africa’s Mutual & Federal said yesterday they would fight an offer by the country’s biggest insurer Old Mutual Plc to buy them out, as they considered it too low.

London-listed Old Mutual said Tuesday it would buy out the minority shares at 17,50 rand each after agreeing to buy Royal & Sun Alliance’s 37,1 per cent of Mutual & Federal Insurance Company for 100 million pounds or 15,25 rand a share. The Royal & Sun deal will bring Old Mutual’s stake in Mutual & Federal, which provides short-term insurance cover in South Africa, to 88 per cent.Under bourse regulations, Old Mutual needs 75 per cent acceptances from the minorities to force the remaining shareholders to accept its offer and delist the firm.The deal with Royal & Sun Alliance gives Old Mutual enough votes for the 75 percent threshold, but minority shareholders such as Stanlib Asset Management still plan to reject the offer.Mutual & Federal is worth around 22 rand per share, said Chief Executive Alan Miller of Stanlib Asset Management, which owns about two per cent of Mutual & Federal shares.Mutual & Federal shares, which have traded in a range of 15-19 rand since October, were up 5,7 per cent at 18 rand by 11h10 GMT yesterday.”It appears that they are trying to force out minority shareholders at what we consider to be a very unfavourable price, and we’re quite unhappy about that,” he told Reuters.Even with the 75 per cent of acceptances, South Africa’s High Court must ultimately approve the deal, Miller said.”It is important for everyone to understand that this is very far from a done deal.Just because they have the 75 per cent supposedly in the bag doesn’t mean that it would necessarily be approved by the High Court,” he said.Stanlib has not yet received a formal reply from Old Mutual regarding its unhappiness with the offer, Miller said.Investec Asset Management, the biggest minority shareholder, with three percent, also plans to reject the offer, South African newspapers reported.Old Mutual Finance Director Julian Roberts said in a conference call on Tuesday that the offer price took into consideration that Mutual & Federal shares were illiquid.An Old Mutual spokesperson said on Wednesday the company had nothing to add to what was said the previous day.Old Mutual’s shares in London were down 0,52 per cent at 96-1/2 pence, while Royal & Sun Alliance shares slipped 0,3 per cent to 97 pence.-Nampa-ReutersThe Royal & Sun deal will bring Old Mutual’s stake in Mutual & Federal, which provides short-term insurance cover in South Africa, to 88 per cent. Under bourse regulations, Old Mutual needs 75 per cent acceptances from the minorities to force the remaining shareholders to accept its offer and delist the firm. The deal with Royal & Sun Alliance gives Old Mutual enough votes for the 75 percent threshold, but minority shareholders such as Stanlib Asset Management still plan to reject the offer. Mutual & Federal is worth around 22 rand per share, said Chief Executive Alan Miller of Stanlib Asset Management, which owns about two per cent of Mutual & Federal shares. Mutual & Federal shares, which have traded in a range of 15-19 rand since October, were up 5,7 per cent at 18 rand by 11h10 GMT yesterday. “It appears that they are trying to force out minority shareholders at what we consider to be a very unfavourable price, and we’re quite unhappy about that,” he told Reuters. Even with the 75 per cent of acceptances, South Africa’s High Court must ultimately approve the deal, Miller said. “It is important for everyone to understand that this is very far from a done deal. Just because they have the 75 per cent supposedly in the bag doesn’t mean that it would necessarily be approved by the High Court,” he said. Stanlib has not yet received a formal reply from Old Mutual regarding its unhappiness with the offer, Miller said. Investec Asset Management, the biggest minority shareholder, with three percent, also plans to reject the offer, South African newspapers reported. Old Mutual Finance Director Julian Roberts said in a conference call on Tuesday that the offer price took into consideration that Mutual & Federal shares were illiquid. An Old Mutual spokesperson said on Wednesday the company had nothing to add to what was said the previous day. Old Mutual’s shares in London were down 0,52 per cent at 96-1/2 pence, while Royal & Sun Alliance shares slipped 0,3 per cent to 97 pence.-Nampa-Reuters