Old Mutual moves to strengthen ties with Mutual & Federal

Keith Kennedy, managing director of the Mutual & Federal

Mutual & Federal announced today that its parent company Old Mutual plc, has notified the Mutual & Federal board of directors of its firm intention to make an offer to acquire the remaining minority ordinary shares in the company.

Old Mutual plc, which currently holds approximately 73.5% of ordinary shares in
Mutual & Federal, seeks to increase its ownership to 100%. Julian Roberts, group chief executive officer of Old Mutual said, “The offer is part of Old Mutual’s focus on driving value creation and optimising internal efficiencies across the group. A successful acquisition of the minority shares will unlock capital synergies for both parties and will also leverage additional capabilities across the Old Mutual Group.”

Speaking on behalf of the Mutual & Federal board, Keith Kennedy, managing director of the company said, “In line with the regulatory requirements, the Mutual & Federal board has appointed JP Morgan as independent experts to advise on the financial terms of the offer. JP Morgan’s opinion will be made public in due course. In addition, the board has convened a sub-committee of independent directors to consider the offer. After considering the opinion of JP Morgan and the recommendations of the sub-committee, the board will advise shareholders of its recommendations in due course.”

Old Mutual is proposing to acquire the minority shareholding by way of a scheme arrangement in terms of section 311 of the Companies Act. The offer is based on a price of R21.25 per Mutual & Federal share, which Old Mutual intends to settle by issuing new Old Mutual ordinary shares.

Mutual & Federal shareholders will have the opportunity to become shareholders in the Old Mutual Group at a premium of 21% above the 30-day volume weighted average price as at 13 October 2009.

The Black Economic Empowerment partners, management and staff share schemes, including Trusts, linked to Mutual & Federal will form part of the scheme and will also be offered Old Mutual ordinary shares. The scheme consideration translates into an exchange ratio of 1.79 Old Mutual ordinary shares per Mutual & Federal ordinary share.

The offer is subject to the fulfillment or waiver of certain conditions which must occur at a scheme meeting to be held by 23 November 2009 or at a later date agreed to by Old Mutual and Mutual & Federal.

Old Mutual indicated that it has already received undertakings from Mutual & Federal shareholders representing 22.5% of the minority shares, who have undertaken to vote in favour of the offer at the Scheme meeting and all resolutions to be proposed at the General meeting.

Having taken legal advice, Mutual & Federal is of the opinion that the approval of the competition authorities in South Africa is not required.