Old Mutual plc: Proposed Acquisition of the Remaining Minority Shareholding in Mutual & Federal

Old Mutual plc ("Old Mutual" or the “Group”) is pleased to announce that it has notified the board of directors of Mutual & Federal Insurance Company Limited (“Mutual & Federal”) of its firm intention to make an offer, in terms of the South African Securities Regulation Code on Takeovers and Mergers, to acquire all the ordinary shares in Mutual & Federal that it or its subsidiaries do not currently beneficially own (the “Shares”), to be implemented by way of a scheme of arrangement in terms of section 311 of the South African Companies Act, 1973 (the "Scheme" or “Offer”). Old Mutual and its subsidiaries currently beneficially own approximately 73.5 per cent. of Mutual & Federal’s issued ordinary share capital.

Old Mutual has received irrevocable undertakings from shareholders of Mutual & Federal representing, in the aggregate, 22.5 per cent. of the shares to which the Offer relates, whereby they have undertaken to vote in favour of the Offer at the Scheme meeting to be held to approve the Scheme.

Old Mutual is offering to acquire the Shares at a price of R21.25 per Share (the “Offer Price”), equivalent to a 21.2 per cent. premium to the 30 day volume-weighted average price (“VWAP”) up to 13 October 2009 of R17.54 per Mutual & Federal share listed on the JSE Limited (“JSE”), for a total consideration of approximately R1,811 million or £155 million, (the “Offer Consideration”). Old Mutual intends to settle the Offer Consideration by way of an issue of new Old Mutual ordinary shares, with the number of shares being calculated based on the 30 day VWAP of Old Mutual’s shares traded on the JSE up to the last practicable date prior to the posting of the Scheme circular to be issued by Mutual & Federal. Based on Old Mutual’s 30 day VWAP up to 13 October 2009 of R11.87 per Old Mutual share, the indicative exchange ratio would be 1.79 Old Mutual shares per Mutual & Federal share.

Settlement of the Offer Consideration is expected by the end of 2009.

The Offer is part of Old Mutual’s continuing focus on driving value creation and optimising internal efficiencies. The acquisition will unlock capital synergies and leverage additional capabilities across the Group’s African operations.

On completion, Old Mutual expects to hold 100% of Mutual & Federal in line with its strategic objective of simplifying the structure of the Group.

Mutual & Federal is an authorised financial services provider which operates primarily in South Africa. Its principal market is the short-term insurance sector, which offers insurance-related services to brokers, agents and their clients. For the 12 month period ended 31 December 2008, Mutual & Federal generated gross premiums of R9.16 billion and a loss before tax of R55 million. As at 30 June 2009, Mutual & Federal’s shareholder equity (net of minorities) was R3.20 billion or R11.44 per Mutual & Federal share.

Commenting on the transaction, Julian Roberts, Group Chief Executive of Old Mutual, said:

"This is a major step towards driving value creation between our South African businesses which is one of our key strategic priorities. We have identified specific business development opportunities and our increased ownership will enhance our ability to improve Mutual & Federal’s operational performance. It also removes any remaining uncertainty about the future of the business for staff and customers.”