9th May 2005 07:01
Barclays PLC09 May 2005 9th May, 2005 BARCLAYS MAKES RECOMMENDED OFFER FOR MAJORITY STAKE IN ABSA Barclays Bank PLC is pleased to announce the terms of a recommended acquisitionof a majority stake of up to 60% in Absa. The Board of Directors of Absa hasvoted unanimously to recommend the acquisition to shareholders. The South African Minister of Finance has approved Barclays application toacquire a majority stake in Absa. The offer has been endorsed by Batho Bonke,Absa's empowerment partner. Barclays also has written expressions of support forthe recommended acquisition from shareholders representing 63% of Absa'sordinary shares. If completed, the acquisition would advance Barclays drive to expand its globalproduct and international retail and commercial banking businesses in attractivemarkets outside the United Kingdom, and it would accelerate Absa's growthstrategy in South Africa and in the rest of the African continent. The combination of Absa's domestic banking expertise, strong brand and marketposition with Barclays global brand reach, world-class products, global bankingexpertise and financial strength would create the leading financial servicesbusiness in South Africa and ultimately the pre-eminent bank on the AfricanContinent. The principal features of the acquisition are: • Barclays is offering Absa Shareholders R82.50 per share, for a total consideration of up to R33 billion (£2.9 billion), the largest ever Foreign Direct Investment in South Africa. • Absa will remain a publicly listed company in South Africa and retain its local identity. • The price represents a premium of 8.5% to the closing share price on 22 April 2005 (the last trading day prior to the detailed cautionary announcement of 25 April 2005) and a premium of 36.4% to the closing share price on 22 September 2004 (the date prior to the first cautionary announcement in relation to the transaction). • In addition, ordinary shareholders shall receive the final dividend for the year ended March 2005 of R2.00 per share. • Dr Danie Cronje will continue to serve as Absa Chairman and become a Non Executive Director of Barclays. Dr Steve Booysen will remain as Absa Group Chief Executive. • David Roberts, Director of Barclays PLC and Chief Executive of Barclays International and Retail Commercial Banking, and Naguib Kheraj, Group Finance Director, will join the Board of Absa as Non Executive Directors. Dominic Bruynseels, Chief Executive of Barclays Africa, will join the Board of Absa as an Executive Director. For Barclays, the transaction would be immediately accretive to earnings pershare and is expected to contribute positive economic profit in the first fullyear following acquisition. The proposed price represents a 8.9x multiple ofmarket consensus earnings for the year ending March 2006, and a 2.4x multiple tomarket consensus book value as at March 2005. Synergies from the combination are expected to improve Absa's pre-tax profits byapproximately R1.4 billion (£123 million) per annum four years after completion,after implementation costs of approximately R1.8 billion (£158 million-) overthe first three years. The transaction is expected to be financed from a combination of availableresources and preference share finance. As at 31 December 2004, Barclays had aTier 1 capital ratio of 7.6%. The impact of the transaction and the associatedfinancing is expected to result in a reduction in Barclays Tier 1 ratio ofapproximately 60 basis points. Subsequent to the successful completion of the proposed transaction, and as soonas practicably possible, it is expected that Absa and Barclays will seek tocombine their African businesses (with the exception of Egypt and the MiddleEast operations) and integrate, as appropriate, Absa's non African internationalbusinesses with Barclays. All such transactions would be effected onarm's-length terms to be agreed, and would be subject, as required, toregulatory approval and appropriate approvals by independent directors andshareholders. John Varley, Group Chief Executive of Barclays PLC, commented: "This transactionaccelerates our strategy to internationalise Barclays earnings and increaseexposure to selected high-growth, well run markets. South Africa is a dynamiceconomy with great growth potential. Absa is an ideal partner for Barclays. Itis South Africa's leading retail bank, with a strong management team making verygood returns for shareholders. Absa has a track record of supporting the SouthAfrican Government's policies to tackle economic and social disadvantage. Itfits well with our own businesses in Africa and gives us the opportunity togenerate synergies and to deploy our global product skills - in credit cards,investment banking, institutional money management and wealth management -across a broader platform." Steve Booysen, Chief Executive of Absa said: "This transaction represents anacknowledgement of Absa and South Africa's achievements over the past decade. Itwould enable our shareholders to realise value now and share in futureperformance. Our customers will have access to the best of Barclays, the globalskills and scale of one of the top ten banks in the world, while maintainingtheir access to Absa; the familiarity and relationships that come with being avalued customer of South Africa's leading retail bank. Our staff will beprovided with the opportunity to participate in a dynamic business with goodgrowth potential and exciting international opportunities. "By working with Barclays, we accelerate the achievement of our strategic intentto build the leading banking business in the new South Africa and, ultimately,on the African continent. It will provide a positive impetus for the continueddevelopment of South Africa and the wider continent." Barclays is being advised by J.P. Morgan and Barclays Capital. Absa is being advised by Goldman Sachs International, Merrill LynchInternational and Absa Corporate and Merchant Bank. - Ends - PRESENTATION AND CONFERENCE CALL DETAILS Presentation to the South African market A presentation to investors, analysts and media will be hosted by Danie Cronje,David Roberts, and Steve Booysen in Johannesburg at 09.00 BST, London Time.The access details are as follows:1. a live audio webcast of the event is available atwww.investorrelations.barclays.co.uk 2. a live conference call can be accessed in the UK by dialling 0800 9177042 or 0800 279 3956. In the USA please dial toll free on 1 866 752 6032.Please contact Barclays Investor Relations (+44 (0)20 7116 2921/2922) should yourequire an access number if you are dialling from outside the UK or USA. Invitation to Barclays analyst and investor conference callBarclays will host a conference call for investors and analysts at 11.00 BST,London Time. The dial in numbers for the conference call are: 0845 301 4020 (UK callers) or + 44 (0)20 7663 4861 (outside UK). Please ask for the "Barclays Update" which will be chaired by Naguib Kheraj,Group Finance Director. An archived version of both events will be available later today on our website:www.investorrelations.barclays.co.uk. . For further information, please contact: Absa Group Limited Barclays PLC Investor Relations Investor RelationsWillie Roux Cathy Turner/James S Johnson+27 (0)11 350 4061 +44 (0)20 7116 2930/2927Media Relations Media Relations - LondonNick Cairns Leigh Bruce/Jo Thethi+27 (0)11 350 6565 +44 (0)20 7116 6083/6217 Media Relations - Johannesburg Liz Hooper +27 (0) 11 328 3160 Disclaimer Many of the statements included in this announcement are forward-lookingstatements that involve risks and uncertainties. You can generally identifyforward-looking statements by the use of terminology such as "may", "will","expect", "intend", "plan", "estimate", "anticipate", "believe", or similarphrases. All statements, other than statements of historical facts, including, amongothers, statements regarding Absa's future financial position, businessstrategy, projected levels of growth in the banking and financial markets,projected costs, estimates of capital expenditures and plans and objectives ofmanagement for future operation, are forward-looking statements. Absa's andBarclays actual future performance could differ materially from theseforward-looking statements and you are cautioned not to place undue reliance onthem. Factors that could cause the actual results, performance or achievements of Absaor Barclays to differ materially from those described herein include: theability to implement the Scheme or complete the Recommended Offer; the abilityto integrate Absa's and Barclays businesses; costs associated with theacquisition or integration; the inability to realise the expected synergies fromthe acquisition; the inability to obtain all necessary approvals, includingregulatory approvals, for the Scheme or Recommended Offer or any integrationtransactions; the economic environment of the industries in which Absa andBarclays operate; and the political environment of the countries in which Absaand Barclays operate. Forward-looking statements involve known and unknown risksand uncertainties and other factors which may cause the actual results,performance or achievements of Absa or Barclays, or the industries in which theyoperate, to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements. The information in this Announcement is made as of the date hereof and Absa andBarclays have no obligation to update the information. All written and oralforward-looking statements attributable to Absa and Barclays or persons actingon their behalf are qualified in their entirety by these cautionary statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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