Metropolitan and Momentum merger unconditional

All the suspensive conditions to the transaction between FirstRand, Momentum and Metropolitan were fulfilled this week, paving the way for the creation of the merged entity, MMI Holdings.

The conditions included confirmation from the JSE that it will list the new MMI Holdings shares and the registration of the special resolutions by the registrar of companies. In addition, the Financial Services Board (FSB) and the Competition Tribunal have approved the transaction. However, the Competition Tribunal imposed a condition that there may be no retrenchments in South Africa as a result of the merger for two years after the implementation of the transaction (except in the case of senior management).

‘We are very pleased to have received the approvals; however, we have asked for and are awaiting clarification from the Competition Tribunal on the conditions imposed by them. In the meantime, we will proceed with our strategic and operational implementation plan for the new entity,’ says Nicolaas Kruger, MMI Holdings CEO designate.

Notwithstanding the fact that all the suspensive conditions have been fulfilled and that the merger will be implemented, Momentum and Metropolitan have also lodged an appeal against the Competition Tribunal’s order. The deadline for lodging the appeal was Thursday 11 November and since the parties had not yet received the reasons for the Competition Tribunal's order by then, they considered it prudent to lodge the appeal. However, the merging parties will only make a final decision on whether or not to pursue the appeal once the Competition Tribunal has ruled on the application for clarification and has given the reasons for its order.

The designated board of MMI Holdings held a planning meeting this week where they confirmed their support for and commitment to the conclusion of the transaction.

‘We are very encouraged by the unconditional endorsement by our new board, whose members bring a wealth of wisdom and experience to the oversight of MMI Holdings,’ says Kruger.

Summing up, Kruger said, ‘The next steps are the JSE listing of the MMI Holdings shares issued to FirstRand and subsequent unbundling thereof to FirstRand shareholders. We expect these to be concluded during December 2010’.

In addition, rating agency Fitch released its Rating Action Commentary today where Momentum and Metropolitan Life’s National Insurer Financial Strength ratings were equalised at ‘AA(zaf)’. Fitch states that it expects the merged entity will create a stronger and more competitive, insurance-based financial services group locally and in Africa and that if the expected benefits of the merged entity are realised, the ratings could be upgraded.