Sanlam Limited (Sanlam) announced a proposal to return up to R2.7 billion to Sanlam ordinary shareholders by way of a voluntary tender offer to acquire a maximum of 125 million Sanlam ordinary shares. The voluntary tender offer will be implemented through a specific repurchase of Sanlam ordinary shares that will be funded out of cash and liquid assets of the Group.
Dr Johan van Zyl, Group chief executive of Sanlam commented on the rationale of Sanlam's offer: "In order to maintain an efficient capital structure, Sanlam constantly evaluates the optimal level of capital required to support the Group and the activities of its individual operations. Sanlam's board of directors has concluded that the Group currently holds capital in excess of its requirements and have accordingly decided to implement a voluntary tender offer in order to enhance the financial efficiency of the Group and benefit Sanlam's ordinary shareholders."
Commenting on structuring the capital reduction, van Zyl continued: "A key consideration when structuring the capital reduction was that the offer was voluntary and available to all ordinary shareholders, irrespective of the size of their shareholdings. Under a voluntary tender offer there is no obligation to participate and ordinary shareholders will be able to indicate the price at which they would be willing to sell all or a part of their holdings and are able to exit their shareholding in an inexpensive manner. Therefore, the voluntary tender offer has been structured using a strike price mechanism and all successfully tendered Sanlam ordinary shares will all be acquired at the same strike price."
The price range per Sanlam ordinary share that Sanlam will accept tenders from is between R17.00 and R21.00 (inclusive) in increments of R0.50 only. The minimum price (R17.00) represents a discount of 4,7% and the maximum price (R21.00) a premium of 17,7% to the volume weighted average market price of Sanlam ordinary shares traded on the JSE Limited for the five trading days preceding Wednesday 7 March 2007, less a dividend of R0.77 per Sanlam ordinary share.
The voluntary tender offer is subject to the approval of Sanlam shareholders at a general meeting to be convened.