Sanlam Private Investments makes offer to purchase UK stockbroking firm

Sanlam Private Investments (SPI) - the private investment and wealth management business within the JSE-listed Sanlam Group - today announced that its associate, Sanlam Private Investment Holdings UK Limited (Bidco), has made a conditional offer to purchase leading UK stockbroking firm Merchant Securities Group plc. The offer to shareholders is subject to a number of conditions, including receiving 90 percent acceptances of shares to which the offer relates and the approval of the Financial Services Authority.

The offer follows the recent acquisition of a 9.74 percent stake in Merchant Securities on the open market. The offer is confirmed at a price of 22p/share for the balance of shares which values the entire issued and to be issued share capital of Merchant Securities at GBP12,2 million. Terms have been agreed with management to hold a stake of 25 percent in Bidco and accordingly retain an effective indirect stake of 25 percent in Merchant Securities.

Merchant Securities has been listed on AIM, the London Stock Exchange’s international market for smaller growing companies, since March 2005 and is a diversified financial services company that provides stockbroking and investment banking as well as private client investment and wealth management services.

“This potential acquisition would facilitate our entry into the UK stockbroking market, and supports our strategy to expand our UK activities,” says SPI CEO Daniël Kriel. “The successful completion of this transaction will expand our existing product and service offering to both our South African and UK high net worth client base, and would also enable us to provide clients with a global execution service from within our group.”

Kriel says market conditions have created a highly favourable environment for acquisitions of this nature. “We searched for some time for the right UK business and identified Merchant Securities as a quality operation that will complement and add value to our team into the future.”

John Green, chairman of Merchant Securities says, "We are pleased to have agreed this offer with Sanlam. The offer price represents a significant premium to both current and recent market prices and enables shareholders to realize their investment for cash. We believe the takeover by Sanlam will deliver attractive commercial advantages for both businesses and that together we shall be able to accelerate the growth opportunities and move to a new phase of growth in the UK.”

The offer to purchase Merchant Securities follows the successful previous acquisition by Sanlam of UK private client investment management businesses, Principal Investment Management and Border Asset Management.