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The battle for Santam

04 May 2007 Gareth Stokes

There are three major short-term insurance companies listed on the JSE. These include Santam (SNT), Mutual & Federal (MAF) and SA Eagle (SAE). The last two mentioned are tightly held and trade in small volumes. And this, according to Shaun Harris of Finwe

Santam's major shareholder is Sanlam Limited which holds 52.86% of Santam's issued shares. Investec is the only other major shareholder with 4.82%. For the record, SA Eagle's main shareholders are SA Fire House Limited (73.61%), Mutual & Federal (11.29%) and Royal Bafokeng (10%). The majority of Mutual & Federal is held by Old Mutual Group with 76.85%.

If recent market activity is anything to go by, it seems Sanlam has plans to acquire more of Santam's issued share capital in coming months. It is unclear what Sanlam's intentions are, but some speculate the group will attempt to slowly add to its shareholding to get closer to the 75% mark. The company would then be able to successfully take out minorities with the view to perhaps de-listing Santam.

Takeover talk started in 2006

In August 2006, Santam and its parent company Sanlam issued a joint cautionary statement in which they indicated that they were in talks to allow Sanlam to obtain the balance of Santam shares the company did not already own.

At the time, Santam Chief Executive Officer, Steffen Gilbert said that the move would enable the companies to make better use of capital. Santam was operating with a 54% solvency level - having paid a special dividend of R1 billion to shareholders. In the event that Santam was wholly owned by Sanlam, it would have been able to adopt a leaner capital solvency level of around 35%.

Shares in Santam were trading at R81 per share at the time of the cautionary - but due to resistance from minorities no firm offer was made to repurchase the shares. The takeover talks were called off in September.

A more subtle approach in 2007

In April 2007, a new series of SENS announcements were issued by Sanlam. In these announcements, Santam offered to re-purchase shares from minority shareholders at a price of R102 per share. This price represented an 8.5% premium on the Santam share price at the time of the offer.

Sanlam, keen to boost their shareholding closer to the 75% level undertook to repurchase any of these shares in excess of 10% of the total shareholding. In other words, Santam would purchase back the first 10% of shares offered up by minorities - while Sanlam would pick up any surplus. A quick look at the directors dealings pages reveals that Gilbert availed of this offer to unload 58, 000 shares.

The result of the repurchase offer was made known in a Sanlam SENS announcement on 20 April 2007. "Santam has received total tenders in respect of 6,972,940 Santam shares, representing 5.88% of Santam's issued ordinary shares. As the total number of Santam shares tendered is not in excess of 10% of Santams issued ordinary shares, all Santam shares tendered will be repurchased pursuant to the voluntary repurchase offer. Sanlam will not purchase any Santam shares in relation to the Sanlam offer."

Another 10% of Santam up for grabs

Santam recently announced details of their BEE deal. Gilbert said: "I am pleased to announce that the board has resolved to enter into a BEE transaction that will involve the sale of 10% of Santams issued ordinary shares. To facilitate the proposed transaction, a scheme of arrangement will be proposed which will oblige Santam shareholders to sell 10% of their ordinary shares at a discounted price of R82 per share."

With Santam now trading at R110 per share, it seems the BEE consortium is already sitting on a handsome profit. It appears that Santam is safe from being del-listed for the time being.

Editor's thoughts:
There are numerous examples of majority shareholders holding sway over minorities on the JSE. Do you believe that Sanlam will eventually be successful in obtaining 75% of Santam? Send your comments to


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