Sanlam swallows African Life

JOHANNESBURG – South African insurer Sanlam said yesterday it agreed to buy smaller rival African Life for 2,4 billion rand to increase its African business and broaden its product offering.

Sanlam, the second-biggest South African insurer, said it would offer 22,05 rand per African Life share and an additional 0,45 cents per share if the offer becomes unconditional by February 15. African Life offers entry-level insurance products in South Africa, Botswana and six other African countries.It said in a separate statement that its board considered the offer fair and recommended that shareholders accept the bid.”We need more bulk in this market segment and that is where African Life fits in…The African footprint is a very nice bonus to have,” Sanlam Chief Executive Officer Johan van Zyl told an analysts presentation.Sanlam shares rose as much as 3,4 per cent to 13,10 rand, as investors welcomed the bid, which analysts said was well priced.”I think Sanlam has done well; the market was expecting Sanlam to overpay and they haven’t,” one Johannesburg-based analyst said.African Life shares were down 2,04 per cent at 21,65 rand.Shares in the group have gained 16 per cent so far this year, much of the gains on speculation of a bid from Sanlam.The two groups said in a joint statement that African Life had received an offer from the Momentum Group Ltd., a unit of banking group FirstRand, to acquire African Life Health for 176 million rand.Momentum, which operates in the upper income market in South Africa, holds a 34 per cent stake in African Life and said in a statement it had agreed to sell its holding to Sanlam for 882 million rand.Momentum Chief Executive Officer Hillie Meyer said the group no longer needed a vehicle to reach the lower end of the insurance market, as such opportunities existed within the FirstRand group.If the Momentum bid for African Life Health fails to become unconditional by February 15, the board will try and dispose of the unit to a third party for in excess of 130 million rand.Should they fail to dispose of the health business, the value of the Sanlam offer will be 2,35 billion rand.Sanlam said last month it would spend 3 billion rand on growth opportunities and a further 4 billion rand to buy back its own shares.- Nampa-ReutersAfrican Life offers entry-level insurance products in South Africa, Botswana and six other African countries.It said in a separate statement that its board considered the offer fair and recommended that shareholders accept the bid.”We need more bulk in this market segment and that is where African Life fits in…The African footprint is a very nice bonus to have,” Sanlam Chief Executive Officer Johan van Zyl told an analysts presentation.Sanlam shares rose as much as 3,4 per cent to 13,10 rand, as investors welcomed the bid, which analysts said was well priced.”I think Sanlam has done well; the market was expecting Sanlam to overpay and they haven’t,” one Johannesburg-based analyst said.African Life shares were down 2,04 per cent at 21,65 rand.Shares in the group have gained 16 per cent so far this year, much of the gains on speculation of a bid from Sanlam.The two groups said in a joint statement that African Life had received an offer from the Momentum Group Ltd., a unit of banking group FirstRand, to acquire African Life Health for 176 million rand.Momentum, which operates in the upper income market in South Africa, holds a 34 per cent stake in African Life and said in a statement it had agreed to sell its holding to Sanlam for 882 million rand.Momentum Chief Executive Officer Hillie Meyer said the group no longer needed a vehicle to reach the lower end of the insurance market, as such opportunities existed within the FirstRand group.If the Momentum bid for African Life Health fails to become unconditional by February 15, the board will try and dispose of the unit to a third party for in excess of 130 million rand.Should they fail to dispose of the health business, the value of the Sanlam offer will be 2,35 billion rand.Sanlam said last month it would spend 3 billion rand on growth opportunities and a further 4 billion rand to buy back its own shares.- Nampa-Reuters