22nd Dec 2005 07:00
Barclays PLC22 December 2005 ABSA GROUP LIMITED BARCLAYS BANK PLCIncorporated in the Republic of South Africa) (Registered in England)(Registration No. 1986/003934/06) (Registration No. 1026167)JSE Code: ASA ("Barclays")Issuer Code: AMAGISIN Code: ZAE000067237("Absa" or "the Company") ACQUISITION OF THE BRANCH BUSINESS OF BARCLAYS BANK PLC IN SOUTH AFRICA BY ABSABANK LIMITED 1. Introduction Further to the transaction contemplated in the circular to Absa shareholdersdated 20 May 2005, and the acquisition by Barclays of Absa ordinary shares inthe open market, Barclays now holds approximately 56% of the issued Absaordinary shares. Shareholders are advised that Absa Bank Limited, a wholly owned subsidiary ofAbsa, has entered into agreements with Barclays for the acquisition as a goingconcern of the Barclays South African Branch Business (the "Business")comprising the Barclays Capital South Africa business and the Corporate andBusiness Banking business as carried on by the South African branch of Barclays,together with related assets and liabilities (the "Acquisition"). 2. Salient Terms of the Acquisition 2.1 Purchase Consideration The purchase consideration in respect of the Acquisition is R578 million whichis based on the net asset value of the Business at 31 August 2005, and whichwill be adjusted to reflect the net asset value of the Business at the effectivedate. The purchase consideration will be settled in cash. 2.2 Transaction Structure The transfer of assets and liabilities in respect of South African law governedassets and contracts will take place by operation of section 54 of the BanksAct, 1990. The transfer of other assets and contracts not governed by SouthAfrican law has been dealt with on a contractual basis. 2.3 Effective Date The effective date of the Acquisition is the first day of the calendar monthfollowing fulfilment of the suspensive conditions as set out in paragraph 8below which is expected to be on 1st January 2006. 2.4 Warranties and indemnities The acquisition agreement contains warranties and indemnities which are normalfor a transaction of this nature. 3. Rationale for the Transaction As previously announced to shareholders, both the Absa and Barclays Boardssupport the vision of creating the pre-eminent bank in Africa and have agreed inprinciple, subject to regulatory and such other approvals as are required, tointegrate on an arm's length basis Barclays South Africa and the other BarclaysAfrica Sub-Saharan businesses into Absa. The Acquisition of the Business is thefirst such integration transaction. 4. Details of the Business Acquired The Corporate and Business Banking portion of the Business focuses on promotingthe product range of debt originated in South Africa, specialised property andproject finance, as well as transactional banking to corporate and businessclients. Barclays Capital South Africa is part of Barclays Capital, theinvestment banking division of Barclays and it provides a full range offinancing, investment and risk management products to its clients. The Businesshas total assets of approximately R12,9 billion and employs 170 employees, whowill be transferring to Absa Bank. 5. Pro Forma Financial Effects The pro forma financial effects of the Acquisition on the financial results ofAbsa for the six month period ended 30 September 2005 in respect of earnings andheadline earnings per share are positive but not significant (being less than 3%in accordance with the definition of the Listings Requirements of the JSELimited ("JSE")) and has no effect in the case of net asset value and nettangible asset value per share. 6. Related Party Transaction and Fair and Reasonable Opinion in termsof the JSE Limited's Listing Requirements The Acquisition constitutes a "small related party transaction" in terms ofparagraph 10.7 of the Listings Requirements of the JSE due to Barclays being thecontrolling shareholder of Absa. In terms of the Listings Requirements of theJSE, a related party transaction requires that an independent professionalexpert, acceptable to the JSE, must conclude that the terms and conditions ofthe proposed Acquisition from Barclays are fair and reasonable as far as theshareholders of Absa are concerned. Accordingly, the Absa Board appointed NMRothschild and Sons (South Africa) (Proprietary) Limited ("Rothschild") toreview the terms and conditions of the Acquisition and report as to the fairnessand reasonableness of the terms and conditions of the Acquisition. Rothschild, after considering the information made available by Absa andBarclays, and after discussions with the respective management teams, is of theopinion that the terms and conditions of the Acquisition are fair and reasonableto Absa shareholders. Rothschild's opinion is available for inspection during office hours at theregistered address of Absa, namely 3rd Floor, Absa Towers East, 170 Main Street,Johannesburg, 2001 in terms of the Listings Requirements of the JSE for a periodof 28 days from the date of this announcement. 7. Opinion of the Absa Board The Absa Board (excluding the Barclays nominee directors) has considered, interalia, the recommendation of a Board Committee consisting of independentdirectors, the opinion from Rothschild and the commercial implications of theAcquisition in arriving at its opinion in respect of the terms and conditions ofthe Acquisition. The Absa Board is of the opinion that the terms and conditionsof the Acquisition are fair and reasonable to and in the interests of Absashareholders as a whole. 8. Suspensive Conditions The Acquisition is subject to the execution of all related documentation andreceipt of minor related approvals by 31 January 2006, or such later date as maybe agreed by the parties. 9. Wealth Management Linked to the Acquisition, the small Barclays International Personal and Premiersales team in South Africa will transfer to Absa Private Bank, a division ofAbsa Bank. 10. Forward Looking Statements This announcement contains certain forward-looking statements within the meaningof Section 21E of the US Securities Exchange Act of 1934, as amended and Section27A of the US Securities Act 1933, as amended, with respect to certain of theBarclays/Absa plans and its current goals and expectations relating to thepotential transaction described above. By their nature, forward-lookingstatements involve risk and uncertainty because they relate to future events andcircumstances, including, but not limited to, domestic and global economic andbusiness conditions, market related risks such as changes in interest rates andexchange rates, the policies and actions of governmental and regulatoryauthorities, changes in legislation and the impact of competition, a number ofwhich are beyond Barclays/Absa control. As a result, actual future results maydiffer materially from the plans, goals and expectations set forth in theforward-looking statements. 22 December 2005 Merchant bank, transaction advisor and joint-sponsor to AbsaAbsa Corporate and Merchant Bank Lead sponsor to AbsaMerrill Lynch South Africa (Proprietary) Limited Legal advisors to AbsaWebber Wentzel BowensLinklaters Due Diligence Advisors to AbsaKPMG Independent expert to AbsaNM Rothschild and Sons (South Africa) (Proprietary) Limited Financial advisor to BarclaysBarclays Capital Legal advisors to BarclaysDeneys Reitz Inc.Clifford Chance For further information, please contact: Barclays PLCInvestor Relations Media RelationsJames S Johnson/Anne Ramsay Chris Tucker+44 (0) 20 7116 2927/8171 +44 (0) 20 7116 6223 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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