Sanlam’s R6.5bn bid for Assupol

JSE-listed insurance giant Sanlam announced its firm intention to acquire all the issued ordinary shares in Pretoria-headquartered insurer Assupol in a R6.5 billion deal on Friday.

Assupol, which is listed on the Cape Town Stock Exchange (CTSE), also confirmed the deal in a statement.

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The 110-year-old insurer said that Sanlam Limited (Sanlam), through its wholly-owned subsidiary Sanlam Life Insurance Limited (Sanlam Life), intends to acquire 100% of Assupol, pending shareholder and regulatory approval, for R6.5 billion.

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“This proposed transaction, to be implemented by way of a Scheme of Arrangement, follows the announcement last year that Budvest Proprietary Limited [Budvest], which holds 46.02% of Assupol’s securities, as well as the International Finance Corporation [IFC], holding 19.41% of Assupol, intends to dispose of their respective shareholdings,” the company said.

Assupol noted that both institutions selling their stakes in the group have been shareholders in Assupol for 10 years.

“Budvest and IFC have provided irrevocable undertakings to vote in favour of all the resolutions required to implement the Scheme of Arrangement.

“The decision on the new potential investor, Sanlam, was made after careful consideration and extensive evaluation, by the Assupol board of directors, of the potential benefits for all parties involved,” it added.

New chapter

Assupol chairman Dr Reuel Khoza, said: “This acquisition by Sanlam will not only strengthen Assupol’s position in the market but also enhances our ability to continue providing exceptional value to our clients. We are excited about this new chapter and look forward to the benefits it will bring to both our employees and clients.”

In its JSE Sens statement on the proposed deal on Friday, Sanlam highlighted Assupol releasing an announcement on the CTSE on 3 April 2023 that “material shareholder” Budvest, together with “significant minority shareholder” the IFC, intending to sell their respective interests in Assupol.

“Following the successful conclusion of the sale process, holders of Assupol ordinary shares… are advised that Assupol and Sanlam, through its wholly-owned subsidiary Sanlam Life, entered into an implementation agreement on 1 February 2024,” it said.

“Sanlam sees Assupol as a strong strategic fit within the Sanlam Group that can enhance and contribute to Sanlam’s existing scale in the retail mass segment.

“This market segment is of strategic priority for Sanlam and is receiving significant focus and support to ensure strong ongoing growth. Furthermore, Assupol’s strong customer base in Gauteng can strengthen the strategic position in this competitive province,” added Sanlam.

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Assupol Life began in 1913 as a burial society for members of the South African Police Service.

“This strategic move will further strengthen the two companies’ position in the market and enhance their ability to provide comprehensive insurance solutions to their respective clients,” Assupol said.

“There are no anticipated changes to the operations of both companies arising from Sanlam’s offer.

“Assupol’s excellent brand and reputation, which is trusted and widely recognised with over four million lives insured in South Africa, will be preserved and further promoted,” it added.

“Sanlam and Assupol share similar values regarding socio-economic transformation and ethical behaviour and are excited about the positive impact their combination can bring to the South African market and to the lives of clients,” the joint statement said.

The board of directors of Assupol, in accordance with Regulation 108 of the Takeover Regulations, constituted an independent board, considered the terms of the Sanlam offer.

“The independent board has resolved to recommend the offer to Assupol ordinary shareholders and the holders of the ‘B’ shares in Assupol. The implementation of the Scheme of Arrangement will be subject to the fulfilment or waiver, as the case may be, of conditions precedent, by 31 January 2025, including, Assupol shareholder, CTSE, the Takeover Regulation Panel, the competition authorities and all other relevant approvals for a transaction of this nature,” it noted.

Assupol’s market capitalisation on the CTSE is around R4.94 billion as at 1 February 2024.

“As at 30 June 2023, being the date of the last audited annual financial statements of Assupol, the value of the net assets of the Assupol Group was R5.39 billion, the embedded value was R7.07 billion and the profit after tax for the period was R716.26 million,” Sanlam said in its Sens statement.

Sanlam’s share price

Harry Byrne

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