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SASFIN HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 87/02097/06)
("SASFIN" OR "THE COMPANY")
ACQUISITION OF SG FRANKEL POLLAK SECURITIES (PTY) LIMITED ("SGFP")
INTRODUCTION
SHAREHOLDERS ARE REFERRED TO THE CAUTIONARY ANNOUNCEMENTS PUBLISHED IN THE
PRESS ON 12 JULY 1999, 3 AUGUST 1999, 24 AUGUST 1999 AND 11 OCTOBER 1999. IN
TERMS OF AGREEMENTS SIGNED ON 4 NOVEMBER 1999, SASFIN ITSELF, OR THROUGH ITS
WHOLLY-OWNED SUBSIDIARY, SASFIN BANK LIMITED ("SASFIN BANK"), WILL ACQUIRE 100
PERCENT OF THE ISSUED SHARE CAPITAL IN AND SHAREHOLDERS' CLAIMS AGAINST SGFP
FROM SOCIETE GENERALE ("SG") AND THE 40 PERCENT OF SG FRANKEL POLLAK FINANCIAL
SERVICES (PTY) LIMITED ("SGFPFS") WHICH SGFP DOES NOT OWN, FROM THE MINORITY
SHAREHOLDERS ("THE ACQUISITIONS"). PRIOR TO THE ACQUISITIONS BECOMING
EFFECTIVE, THE INSTITUTIONAL SALES AND RESEARCH BUSINESSES OF SGFP WILL BE
TRANSFERRED TO SG, WHICH THEREAFTER WILL CONTINUE TO OFFER THESE SERVICES TO
ITS INSTITUTIONAL AND CORPORATE CLIENTS.
SGFP'S SOLE BUSINESS AT THE EFFECTIVE DATE OF THE ACQUISITIONS THUS WILL BE
THAT OF SERVICING PRIVATE CLIENTS. IT WILL ALSO HOLD A 60 PERCENT INTEREST IN
SGFPFS, A COMPANY OFFERING FINANCIAL SERVICES AND INSURANCE BROKING TO
INDIVIDUALS AND COMPANIES.
INFORMATION ON SGFP
SGFP IS ONE OF THE OLDEST STOCKBROKING BUSINESSES OPERATING ON THE JOHANNESBURG
STOCK EXCHANGE ("THE JSE"), HAVING COMMENCED BUSINESS IN 1887. OVER THE YEARS
IT HAS DEVELOPED INTO A FULL SERVICE STOCKBROKING FIRM OFFERING PERSONALISED
SERVICES TO ITS CLIENTS.
OPERATING FROM NINE OFFICES AROUND SOUTH AFRICA, SGFP SERVICES ONE OF THE
LARGEST RETAIL CLIENT BASES IN THE INDUSTRY. CURRENTLY IT OFFERS PORTFOLIO
MANAGEMENT, DEAL AND INVESTMENT ADVISORY, AND FINANCIAL PLANNING SERVICES. SGFP
IS WELL ADVANCED IN DEVELOPING A STATE-OF-THE-ART ONLINE TRADING SYSTEM IN
ANTICIPATION OF THE FULL IMPLEMENTATION OF STRATE BY THE JSE.
TERMS OF THE ACQUISITION
SUBJECT TO THE FULFILMENT OR WAIVER OF THE CONDITIONS PRECEDENT SET OUT BELOW,
SASFIN WILL ACQUIRE SGFP. THE EFFECTIVE DATE OF THE ACQUISITIONS WILL BE THE
FIRST MONDAY OF THE MONTH FOLLOWING THAT IN WHICH THE LAST CONDITION PRECEDENT
IS FULFILLED OR WAIVED.
THE PURCHASE CONSIDERATION ATTRIBUTABLE TO SGFP'S PRIVATE CLIENT DIVISION, OF
R80 000 000, WILL BE SETTLED IN CASH RAISED, PARTLY FROM THE ISSUE TO KEY SGFP
AND SGFPFS STAFF OF NEW ORDINARY SHARES TO BE ISSUED AT R13 PER SHARE IN THE
SHARE CAPITAL OF SASFIN TO THE VALUE OF R30 000 000, AND THE BALANCE FROM
SASFIN'S OWN RESOURCES.
AS AN ADJUSTMENT TO THE PURCHASE CONSIDERATION ATTRIBUTABLE TO SGFP'S PRIVATE
CLIENT DIVISION, SASFIN WILL PAY SG AN ADDITIONAL AMOUNT EQUAL TO 50 PERCENT OF
ANY NET PROFIT AFTER TAXATION, IN EXCESS OF R10 000 000 IN THE FIRST YEAR AFTER
THE EFFECTIVE DATE, AND 25 PERCENT OF ANY NET PROFIT AFTER TAXATION IN EXCESS
OF R10 000 000 IN THE SECOND YEAR AFTER THE EFFECTIVE DATE. THIS ADDITIONAL
AMOUNT IS LIMITED TO R10 000 000.
SG WILL CO-OPERATE WITH SASFIN TO ENSURE CONTINUITY OF SERVICE TO SGFP'S
CLIENTS. SG, WHICH IS A SUPPLIER OF SERVICES PROVIDING LOCAL AND INTERNATIONAL
RESEARCH, WILL SUPPLY SASFIN, FOR A LIMITED PERIOD, SOME SPECIALISED SG
PRODUCTS AND SETTLEMENT SERVICES IN TERMS OF ITS APPOINTMENT AS A STRATE CSDP.
SASFIN WILL ACQUIRE 100 PERCENT OF SGFPFS FROM SGFP AND THE MINORITY
SHAREHOLDERS OF SGFPFS. THE PURCHASE CONSIDERATION ATTRIBUTABLE TO 100 PERCENT
OF THE EQUITY OF SGFPFS, WHICH WILL BE DETERMINED FROM THE FINANCIAL STATEMENTS
OF SGFPFS, AT AND FOR THE YEAR ENDING 31 DECEMBER 1999, IS EXPECTED TO BE
APPROXIMATELY R5 000 000.
RATIONALE FOR THE ACQUISITION
SASFIN WAS LISTED ON THE JSE IN 1987. OVER THE LAST FIVE YEARS SASFIN HAS
ACHIEVED A COMPOUND GROWTH IN HEADLINE EARNINGS PER SHARE OF 38 PERCENT. THIS
WAS ACHIEVED BY PROVIDING A COMPREHENSIVE RANGE OF FINANCING PRODUCTS AND
SERVICES TARGETED PRIMARILY AT SMALL TO MEDIUM-SIZED BUSINESSES. THROUGH
ASSOCIATES, IT ALSO RENDERS SERVICES IN THE AREAS OF LIFE AND SHORT-TERM
INSURANCE BROKING, PRIVATE EQUITY INVESTMENT, LOGISTICS, FREIGHT FORWARDING AND
CUSTOMS CLEARING. THIS YEAR, SASFIN BANK WAS GRANTED A BANKING LICENCE. THE
MAIN MOTIVATION FOR THIS DEVELOPMENT WAS AND IS TO ENABLE SASFIN TO LOWER ITS
COST OF FUNDING AND ULTIMATELY INCREASE THE NUMBER OF PRODUCTS AND SERVICES
OFFERED TO ITS CLIENTS.
THE ACQUISITIONS WILL ASSIST SASFIN BANK IN ACHIEVING ITS LONG-TERM PLAN TO
BUILD A FOCUSED BANKING AND FINANCIAL SERVICES GROUP, PROVIDING A WIDE RANGE OF
SYNERGISTIC SERVICES AND QUALITY PRODUCTS TO A COMPLEMENTARY CLIENT BASE. IT IS
ENVISAGED THAT THIS WILL BE ACHIEVED BY:
- USING SGFP'S INFRASTRUCTURE AND CLIENT BASE TO ENTER THE PRIVATE BANKING
MARKET;
- DEVELOPING A CORPORATE FINANCE DIVISION TO SERVICE NOT ONLY ITS OWN CLIENT
BASE BUT ALSO THE MARKET IN GENERAL. SASFIN BANK WILL FOCUS ON MERGER AND
ACQUISITION ACTIVITIES, EQUITY RAISING AND GENERAL ADVISORY SERVICES TO SMALL
AND MEDIUM-SIZED COMPANIES. SASFIN'S SECURITISATION DIVISION, WHICH HAS BEEN
OPERATIONAL FOR EIGHT YEARS, WILL FORM PART OF THE CORPORATE FINANCE DIVISION.
IN THE PAST, SASFIN HAS LIMITED THIS OPERATION TO SECURITISING ITS OWN
RECEIVABLES BUT NOW INTENDS TO MARKET THIS PRODUCT TO THIRD PARTIES;
- PROVIDING A COMPLEMENTARY RANGE OF PRODUCTS TO THE CLIENTS OF THE ENLARGED
SASFIN GROUP;
- MERGING SGFPFS WITH SASFIN INSURANCE BROKERS (PTY) LIMITED; AND
- RATIONALISING OTHER DUPLICATED SERVICES AND FACILITIES.
FINANCIAL EFFECTS OF THE ACQUISITIONS ON SASFIN
THE TABLE BELOW SETS OUT THE PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITIONS ON
SASFIN'S ORDINARY SHARES FOR THE YEAR ENDED 30 JUNE 1999 ASSUMING THAT THE
ACQUISITIONS HAD BEEN IN EFFECT FROM I JULY 1998:
BEFORE AFTER
PERCENTAGE
THE ACQUISITION THE ACQUISITION
CHANGE (%)
HEADLINE EARNINGS PER SHARE (CENTS) 121,4 126,4
4,1
NET PROFIT PER SHARE (CENTS) 121,4 126,4
4,1
TANGIBLE NET ASSET VALUE PER SHARE (CENTS) 720,2 431,6
(40,1)
CONDITIONS PRECEDENT
THE ACQUISITIONS ARE CONDITIONAL UPON:
- THE APPROVAL OF THE JSE;
- THE APPROVAL, TO THE EXTENT REQUIRED, OF THE EXCHANGE DEPARTMENT OF THE
SOUTH AFRICAN RESERVE BANK;
- THE APPROVAL, TO THE EXTENT REQUIRED, OF THE REGISTRAR OF BANKS;
- THE APPROVAL, TO THE EXTENT REQUIRED, OF THE COMPETITION COMMISSION;
- THE INVESTMENT IN NEW ORDINARY SHARES IN THE SHARE CAPITAL OF SASFIN OF R30
000 000 BY A CONSORTIUM PRINCIPALLY COMPRISING EXISTING MEMBERS OF SGFP'S
MANAGEMENT TEAM;
- THE JSE GRANTING SG A LICENCE TO CONDUCT STOCKBROKING IN SOUTH AFRICA; AND
- THE APPROVAL OF THE SHAREHOLDERS OF SASFIN IN GENERAL MEETING.
ALL OTHER CONDITIONS PRECEDENT CONTAINED IN THE ACQUISITION AGREEMENT HAVE BEEN
MET.
DOCUMENTATION
A DOCUMENT, WHICH IS SUBJECT TO THE APPROVAL OF THE JSE, SETTING OUT FULL
DETAILS OF THE ACQUISITIONS, IS CURRENTLY BEING PREPARED AND WILL BE POSTED TO
SASFIN SHAREHOLDERS WITHIN 28 DAYS OF THIS ANNOUNCEMENT OR, TO THE EXTENT THAT
THE COMPETITION COMMISSION APPROVAL IS REQUIRED, THE DATE THAT APPROVAL IS
OBTAINED FROM THE COMPETITION COMMISSION.
JOHANNESBURG
5 NOVEMBER 1999
SPONSORING BROKER
SG FRANKEL POLLAK SECURITIES (PTY) LTD
REG. NO. 96/05886/07
(MEMBER OF THE JOHANNESBURG STOCK EXCHANGE)
ATTORNEYS
EDWARD NATHAN & FRIEDLAND INC
(REGISTRATION NUMBER 77/00525/21)
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