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MAF - Mutual & Federal - Fairness Opinion And Board Recommendation Regarding The
Firm Intention By Old Mutual Plc ("Old Mutual")
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1970/006619/06
Share code JSE: MAF & NSX: MTF ISIN: ZAE000010823
("Mutual & Federal")
FAIRNESS OPINION AND BOARD RECOMMENDATION REGARDING THE FIRM INTENTION BY OLD
MUTUAL PLC ("OLD MUTUAL") TO MAKE AN OFFER TO ACQUIRE THOSE MUTUAL & FEDERAL
ORDINARY SHARES NOT CURRENTLY BENEFICIALLY OWNED BY OLD MUTUAL AND/OR ITS
SUBSIDIARIES ("OLD MUTUAL GROUP") ("THE OFFER")
1. Introduction
Mutual & Federal shareholders are referred to the announcement released on
SENS on 14 October 2009 ("Firm Intention Announcement"), that Old Mutual,
which currently holds, directly and indirectly, approximately 73.5% of
Mutual & Federal ordinary shares, has submitted to the board of directors
of Mutual & Federal ("the Board") a notice of its firm intention to make an
offer to the Mutual & Federal shareholders to acquire the remaining shares
in Mutual & Federal`s ordinary share capital not currently beneficially
owned by the Old Mutual Group. Old Mutual intends to implement the Offer by
way of a scheme of arrangement ("Scheme") in terms of section 311 of the
Companies Act, No. 61 of 1973, as amended ("the Companies Act"). The Offer
has been based on an offer price of R21.25 per Mutual & Federal ordinary
share which Old Mutual will settle by way of an issue of new Old Mutual
ordinary shares ("Scheme Consideration"). The Offer anticipates an
appropriate offer in accordance with Rule 12 of the Securities Regulation
Code on Take Over and Mergers ("the Code") (the "Appropriate Offer") to
substitute the unexercised Mutual & Federal options currently outstanding
("Share Options"), in terms of Mutual & Federal`s various staff trusts,
with options over Old Mutual ordinary shares.
Further, Mutual & Federal shareholders were advised that the Board had
convened a sub-committee of independent directors ("Sub-Committee") to
consider the Offer and the Appropriate Offer and that the Board, after
considering the opinion of an independent expert ("Fairness Opinion"), as
required by the Securities Regulation Panel ("SRP"), and the
recommendations of the Sub-Committee, would advise shareholders of their
recommendation in due course. This announcement details the opinion of the
independent expert and the recommendation of the Board and constitutes the
fulfillment of the first condition to the Offer as set out in paragraph 7.1
of the Firm Intention Announcement.
2. Fairness Opinion
JPMorgan Chase Bank N.A., Johannesburg Branch ("JP Morgan") has been
appointed by the Board in terms of Rule 3.1 and Rule 12(b) of the Code, to
advise the Board on the financial terms of the Offer and the Appropriate
Offer. Based on its independently performed procedures and subject to the
conditions set out in the Fairness Opinion, JP Morgan is of the opinion
that, as at 15 October 2009, the exchange ratio implied in the Scheme
Consideration based on the offer price of R21.25 per Mutual & Federal
ordinary share is fair, from a financial point of view, to the Mutual &
Federal shareholders and holders of Share Options to whom the Offer and the
Appropriate Offer, respectively, is made. A copy of JP Morgan`s Fairness
Opinion will be included in the Scheme circular to be posted to Mutual &
Federal shareholders in due course.
3. Recommendation of the Board
Based on, inter alia, the Fairness Opinion by JP Morgan (referred to in
paragraph 2 above), and the recommendation of the Sub-Committee, the Board
is of the opinion that the terms of the Offer and the Appropriate Offer are
fair. Those members of the Board who were not considered independent in
relation to the Offer recused themselves from both the deliberations of the
Board and voting in respect of the Offer.
The members of the Board intend to vote in favour of the Offer in respect
of their own shareholdings in Mutual & Federal and recommend that Mutual &
Federal shareholders do likewise.
The Board further undertakes to facilitate the Offer to the extent that a
board of directors will normally be required for purposes of the
implementation of a scheme of arrangement in terms of the Companies Act.
4. Board responsibility statement
The Board, individually and collectively, accepts responsibility for the
information contained in this announcement and certifies that to the best
of its knowledge and belief, the information contained in this announcement
is in accordance with the facts and does not omit anything likely to affect
the import of such information.
5. Further announcement and documentation
The Scheme circular containing details of the Offer and the Appropriate
Offer and the Scheme as well as the circular regarding the General Meeting
referred to in paragraph 2.3 of the Firm Intention Announcement will be
posted to Mutual & Federal Shareholders in due course.
A further announcement setting out the salient dates of the Scheme and the
General Meeting, the final share exchange ratio for purposes of the Scheme
Consideration and the financial effects of the Offer will also be announced
to Mutual & Federal shareholders in due course.
Johannesburg
19 October 2009
Investment bank, Corporate law Independent Expert
transaction advisor advisors
and transaction
sponsor
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Nedbank Capital, a Edward Nathan JP Morgan
division of Nedbank Sonnenbergs
Limited
Date: 19/10/2009 10:00:01 Supplied by www.sharenet.co.za
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