14th Dec 2016 15:02
LONDON (Alliance News) - Hastings Group Holdings PLC on Wednesday said its principal shareholder has agreed to sell a 29.9% stake in the company for up to GBP499.5 million, and said it welcomes the new investors on board.
Hastings Group said Hastings Investco Ltd has teamed up with other shareholders and reached a deal to sell the stake to Rand Merchant Investment Holdings Ltd for a price, depending on when the sale closes, of between 248.0 pence and 255.0 pence per share, or GBP487.3 million to GBP499.5 million.
Hastings Group shares were up 5.2% to 233.00 pence per share on Wednesday.
That values the entire company between GBP1.62 billion to GBP1.67 billion - comparable to a market capitalisation of GBP1.53 billion on Wednesday afternoon.
The consideration is in cash and the transaction is expected to close, subject to conditions, by May 2, 2017.
"The transaction may be completed in up to three stages, each of which is linked to the receipt of regulatory approvals from the Financial Surveillance Department of the South African Reserve Bank, the UK Financial Conduct Authority and/or the Gibraltar Financial Services Commission, respectively," said Hastings Group.
"The board of the company welcomes the investment by Rand Merchant Investment in the company. Rand Merchant Investment's significant exposure to the insurance sector through a number of strategic investments, including in OUTsurance, which is a fast growing motor and home insurer, brings valuable experience and opportunities for potential co-operation in the future," Hastings Group added.
The deal is being facilitated through a relationship agreement, conditional upon Rand Merchant Investment acquiring at least a 15% stake in the business. Thereafter, the agreement will remain in force as long as that stake stays above 10%.
It must be between 15% to 29.9%, however, for Rand Merchant Investment to elect to appoint a director to the board of Hastings Group, which is currently envisaged to be Rand Merchant Investment's Chief Executive Herman Bosman. OUTsurance Chief Executive Willem Roos is expected to attend meetings as an observer, but hold no voting rights.
At the centre of the agreement is a provision that will prevent Rand Merchant Investment from increasing its stake in Hastings Group above 29.9% until at least three months after it has nominated a director to the board - unless the two parties agree beforehand or Rand Merchant Investment announces its intention to buy at least 50% of the company.
Rand Merchant Investment will be the largest shareholder in Hastings Group at 29.9%. "Founder shareholders" Neil Utley, Edward Fitzmaurice, Keith Charlton, Richard Brewster and Narmali Utley, alongside "GS shareholders" Hastings A LP, Hastings B LP and Goldman Sachs & Co, would jointly hold a 35.8% stake.
"We welcome Rand Merchant Investment as shareholders of Hastings and look forward to working with Herman Bosman as we continue to execute on our attractive growth strategy. Rand Merchant Investment has a number of investments in insurance businesses in South Africa, Australia, New Zealand and the UK," said Chief Executive Gary Hoffman.
"Given this experience, Hastings will look to explore potential areas of cooperation with Rand Merchant Investment and OUTsurance in the future that would accelerate execution of our existing strategy including in the areas of home, data analytics, mobile propositions and operational efficiencies," he added.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
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