9th May 2005 07:01
Barclays PLC09 May 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTOCANADA. THE RECOMMENDED OFFER WILL NOT BE MADE TO SHAREHOLDERS WITHREGISTERED ADDRESSES IN CANADA WHO, IN TERMS OF CANADIAN LAW, MAY ALSO NOTVOTE AT THE SCHEME MEETING FIRM INTENTION ANNOUNCEMENT Absa Group Limited Barclays Bank PLC Barclays PLC(Incorporated in the (Registered in England) (Registered in England)Republic of South Africa) (Registration number: (Registration number:(Registration number: 1026167) 0048839)1986/003934/06) ("Barclays") LSE CODE: BARCJSE CODE: ASA ISIN CODE:ISIN CODE: ZAE000013389 GB0031348658("Absa") ANNOUNCEMENT OF A FIRM INTENTION BY BARCLAYS TO ACQUIRE A MAJORITY STAKE INABSA AT A PRICE OF R82.50 PER SHARE Key features of the Recommended Acquisition: - Recommended Acquisition by Barclays to acquire up to 60% of Absa ordinaryshares for R82.50 per share in cash effected by an inter-conditional 32%scheme of arrangement and 28% partial offer- Ordinary Shareholders will also receive the Absa final dividend ofR2.00 per share- The transaction is unanimously recommended by the Absa Board, has thesupport of management and Barclays has received written expressions ofsupport from key shareholders representing approximately 63% of Absaordinary shares- Regulatory approval has been received from the Minister of Finance- The Recommended Acquisition underpins Absa's vision of developing theleading financial services business in South Africa and the pre-eminentbank on the African continent- It is anticipated that the Recommended Acquisition will generate potentialrevenue and cost synergies which are expected to improve Absa's pre-taxprofits by approximately R1.4 billion per annum four years after completion(after incurring implementation costs of approximately R1.8 billion overthe first three years) INTRODUCTION The Boards of Directors of Absa and Barclays are pleased to announce thatagreement has been reached regarding the terms of Barclays proposed acquisitionof a majority stake in Absa (the "Recommended Acquisition"). Barclays wishes to acquire by way of the Recommended Acquisition up to 60% ofthe ordinary shares in Absa (the "Ordinary Shares"). The RecommendedAcquisition is to be achieved through a dual mechanism, being (i) the Scheme(as defined below) and (ii) the Recommended Offer (as defined below), in termsof which Absa shareholders are invited to tender all or some of their Absashares for purchase. The Scheme, if successful, will result in Barclaysacquiring 32% of each Absa ordinary shareholder's shares and the RecommendedOffer, if successful, will result in Barclays acquiring up to an additional 28%of Absa's ordinary share capital. The Scheme and Recommended Offer areinterconditional. Since Barclays is not seeking to acquire 100% of Absa's ordinary share capitaland in the interest of treating shareholders equally, the structure of theRecommended Acquisition is designed to ensure a minimum level of participationby all Absa ordinary shareholders ("Ordinary Shareholders"), while at the sametime enabling shareholders who wish to participate to a greater extent to doso. The structure was developed as a direct result of feedback from Absashareholders. Shareholders will receive R82.50 in cash in respect of each Absa share acquiredby Barclays whether pursuant to the Scheme or the Recommended Offer. Thisallows shareholders to realise an attractive return on their investment at atime when there has been a significant re-rating of the South African bankingsector in general and Absa in particular. In addition, the Absa Board has declared a final dividend of R2.00 per sharefor the financial year ended 31 March 2005 to be paid on 27 June 2005 toOrdinary Shareholders on the register as at 24 June 2005 (the "Record Date ofthe Final Dividend") - see note 4 to "Salient Dates and Times" below. The key terms of the Recommended Acquisition are described below in the sectionheaded "The Terms of the Recommended Acquisition". Barclays and Absa have committed in principle to the future integration oftheir African businesses on an arm's length basis as described below in thesection headed "Integration of Businesses, including Barclays Africa". No termshave been agreed and regulatory approvals have not yet been sought. Theintegration transactions will, where required, be supported by an independentfairness opinion and will be subject to any necessary independent shareholder(i.e. excluding Barclays) and Board approvals. It is anticipated that thisprocess, which is subject to regulatory and other approvals, will be embarkedupon as soon as practicably possible. The Minister of Finance has approved Barclays application to acquire a majoritystake in Absa pursuant to the requirements of the Banks Act, 1990 and theMinister of Finance has, under Section 18(2) of the Competition Act, excludedthe jurisdiction of the Competition Authorities. The Recommended Acquisition carries the unanimous recommendation of the AbsaBoard and the support of the Absa management team. Barclays has also receivedwritten expressions of support for the Recommended Acquisition from a number ofOrdinary Shareholders, including Sanlam and Remgro (as defined below),representing in aggregate approximately 63% of the Ordinary Shares. Amongstthese, Absa's two largest Ordinary Shareholders, Sanlam Limited ("Sanlam") andFinancial Securities Limited ("Remgro"), accounting for 28% of Absa's OrdinaryShares in aggregate, have also given a written undertaking to vote all of theirshares in favour of the Scheme and to tender all their Ordinary Shares. Inaddition, Barclays has received written support from Batho Bonke Capital (Pty)Ltd ("Batho Bonke") (Absa's black empowerment partner), and the Absa GroupLimited Employee Share Ownership Administrative Trust (the "Absa ESOP Trust")(Absa's employee share ownership programme) (together the "PreferenceShareholders") who will retain their preference shares in Absa after theRecommended Acquisition. STRATEGIC RATIONALE Absa views partnering with a significant global player as key to the creationof long-term shareholder value and to the delivery of its strategic vision ofbecoming the leading financial services business in South Africa and thepre-eminent bank on the African continent. Barclays, as a major global bankwith extensive interests in Africa, is an ideal partner and shares Absa'svision. Barclays views South Africa as an attractive market with good growth prospectsand a sophisticated economic and financial services infrastructure. TheRecommended Acquisition accelerates Barclays strategic objective of buildingits retail and commercial banking, investment banking and credit card presencein selected international markets. As one of the country's big four banks andthe leading retail bank, Absa is an excellent partner for Barclays to expandits interests in South Africa, given Absa's strong market position across majormarket and product segments, distribution capabilities in South Africa and itsoperations and footprint in the rest of the African continent. As at30 September 2004 (the end of Absa's interim reporting period), Absa had totalassets of R313.9 billion and net assets of R21.1 billion, and in the six monthperiod ended 30 September 2004 made R3.3 billion in pre-tax profits. To achieve this vision of creating the leading financial services business inSouth Africa and the pre-eminent bank on the African continent, Absa andBarclays have committed in principle to the future integration of their Africanbusinesses on an arm's length basis. No terms have been agreed and regulatoryapprovals have not yet been sought. It is anticipated that this process, whichis subject to regulatory and other approvals, will be embarked upon as soon aspracticably possible. If successful, it is expected that the Recommended Acquisition will lead to anenhancement in Absa's earnings growth potential through the deployment ofoperational best practices and enhanced cross-selling potential. It will alsooffer access to a broader range of products and services tailored to thespecific needs of Absa's existing and potential customers, and will assist inthe provision of extended banking and financial services to the underbankedpopulation of the South African market. Absa and Barclays believe that the domestic banking expertise, leading brandand strong market position of Absa, combined with the world-class productcapabilities, global banking expertise (including its African operations),international reach and financial strength of Barclays will result insignificant synergies. It is anticipated that the Recommended Acquisition willlead to enhanced business opportunities, improved offerings to customers,exciting career opportunities for employees and long-term value forstakeholders. REVENUE AND COST SYNERGIES As shareholders may retain an equity interest in Absa following the RecommendedAcquisition, they will also be able to participate in any synergy benefits froma combination of Absa and Barclays. Considerable potential revenue and cost synergies have been identified and areexpected to improve Absa's pre-tax profits by approximately R1.4 billion perannum four years after completion of the Recommended Acquisition (afterincurring implementation costs of approximately R1.8 billion over the firstthree years). Revenue synergies should be derived from, amongst other things, combiningBarclays customer relationship management and product packaging capabilitieswith Absa's retail franchise, leveraging Barclays world-class credit card riskmanagement and pricing skills, applying Barclays capabilities and expertise inbusiness and wholesale banking and significantly improved access to capitalmarkets. Cost synergies should be achieved through, amongst other things, the adoptionby Absa of Barclays corporate banking platform in South Africa and operationalefficiencies, such as sourcing synergies through economies of scale, theacceleration of investment in operational and IT effectiveness, productivityenhancement in commercial banking, improving the credit risk management processfor commercial and wholesale banking and the streamlining of certain backoffice functions. The improvement to Absa's pre-tax profits in the fourth year is expected tocome from approximately 60% revenue uplift and 40% cost efficiencies. JSE SECURITIES EXCHANGE SOUTH AFRICA ("JSE") LISTING Both Absa and Barclays intend to maintain Absa's listing on the JSE and anadequate free float which would allow Absa shareholders to participate in theanticipated revenue and cost synergy value uplift. At the same time, Barclaysmajority stake will ensure the alignment of its interests with those of Absa inthe delivery of the synergies. Barclays also acknowledges that Absa's blackeconomic empowerment arrangements with Batho Bonke require that the AbsaOrdinary Shares remain listed on the main board of the JSE for at least theduration of those arrangements. TERMS OF THE RECOMMENDED ACQUISITION The Recommended Acquisition will be made in accordance with all applicablerequirements of the Securities Regulation Code on Takeovers and Mergers (the"Code") and the Companies Act, 1973 (the "Companies Act") and will be effectedthrough two interconditional processes: (i) a scheme of arrangement to beproposed by Barclays between Absa and the Ordinary Shareholders, excluding theAbsa Group Limited Share Incentive Scheme Trust (the "Absa Share Trust") andBarclays and its subsidiaries, save to the extent that they hold Absa OrdinaryShares on behalf of third parties, pursuant to which Barclays would acquire 32%of each such Ordinary Shareholder's shares (the "Scheme"); and (ii) a partialoffer by Barclays to all Ordinary Shareholders and Preference Shareholders(together "Shareholders") to acquire (subject to the excess tender provisionsset out below) from each Shareholder up to an additional 28% of his or hershares (the "Recommended Offer"). The consideration under both the Scheme and the Recommended Offer will beR82.50 per Absa share, payable in cash, which represents a premium of 8.5% tothe closing Absa Ordinary Share price on 22 April 2005, the last trading dayprior to the detailed cautionary announcement published on 25 April 2005; and apremium of 36.4% to the closing Absa Ordinary Share price on 22 September 2004,the date prior to the first cautionary announcement by Absa published on23 September 2004 in relation to this transaction. Full acceptance by the Ordinary Shareholders (assuming implementation of allAbsa employee options under the Absa Share Trust which vest and are implementedin time to be recorded on the Ordinary Share register by the record date of theRecommended Acquisition) would result in payment of a total consideration ofR33.0 billion (£2.9 billion)* in cash. * Based on an exchange rate of £1 = R11.4258. In terms of the Scheme all Ordinary Shareholders participating in the Schemewill dispose of 32% of their Ordinary Shares to Barclays for R82.50 in cash foreach such Ordinary Share. The Recommended Offer will contain the following terms: - Barclays will make a partial offer to acquire (subject to the excess tenderprovisions set out below) from each Shareholder an additional 28% of his orher shares (their "Basic Entitlement") at R82.50 in cash for each suchshare;- all Shareholders will be entitled to tender all or any lesser number oftheir Absa shares and would, as a minimum, be entitled to dispose of (inaddition to the 32% of their Ordinary Shares disposed of under the Scheme)the number of shares which they have tendered up to their Basic Entitlementif the Recommended Acquisition becomes unconditional;- if Shareholders tender in excess of their Basic Entitlement, Barclays willaccept such excess tenders on a pro rata basis (by reference to the numbertendered by each Shareholder in excess of his or her Basic Entitlement) tothe extent that other Shareholders do not tender all of their BasicEntitlement, such that following implementation of the Scheme and thepurchase of all Absa shares pursuant to the Recommended Offer and anyon-market purchases by Barclays, Barclays would be the owner of up to 60%of the issued Absa Ordinary Shares. Selling shareholders may thus be ableto dispose of more than their Basic Entitlement; and- the condition to the Recommended Offer as to minimum acceptances is set ata level which would result in Barclays holding 56.5%* of all Absa'sOrdinary Shares, taking into account shares to be acquired pursuant to theScheme, the Recommended Offer and any on-market purchases by Barclays.Barclays will be entitled (but not obliged) to waive down this condition toa lower percentage level, which shall not, without the consent of theMinister of Finance and Absa, be below 50.1% of Absa's Ordinary Shares. * 56.5% ensures a majority of votes (i) assuming implementation of allAbsa employee options under the Absa Share Trust which vest and areimplemented in time to be recorded on the Ordinary Share register bythe record date of the Recommended Acquisition and (ii) taking intoaccount the Preference Shareholders' voting rights. The Recommended Acquisition will be subject to the fulfilment or waiver of theconditions precedent set out in the section headed "Conditions Precedent ToWhich The Recommended Acquisition Will Be Subject" below, and shall not beimplemented unless the High Court of South Africa (the "Court") has directedthat the requisite Scheme meeting of Scheme members (the "Scheme Meeting") besummoned in a manner and at a time reasonably satisfactory to Barclays andAbsa. If the consideration for the Recommended Acquisition is not paid by 1 August2005, Barclays will pay interest on the consideration payable at the SpecifiedRate from 1 August 2005 to the date of payment, provided that such interestwould not be payable in respect of Ordinary Shares tendered on or after 1August 2005. For these purposes, the Specified Rate shall mean the average ofthe daily one month JIBAR rate as quoted on Bloomberg for the 30 day periodwhich ends 10 days prior to the record date for the Recommended Acquisition. Shareholders who retain their Absa Ordinary Shares until the Record Date of theFinal Dividend of R2.00 for the financial year ended 31 March 2005, will beentitled to receive that dividend when it is paid. Voting such shares in favourof the Scheme and all other resolutions proposed in connection with theRecommended Acquisition and/or tendering them into the Recommended Offer willnot prevent Ordinary Shareholders from receiving the final dividend. Barclays is entitled (but not obliged) to acquire Absa Ordinary Shares throughon-market purchases on the JSE. Such purchases would be made in compliancewith the requirements of the Code and applicable law and Barclays shall notacquire more than 14.9% of Absa's Ordinary Shares by this means. Any suchpurchases would not affect Shareholders' rights to dispose of their BasicEntitlement pursuant to the Recommended Offer. APPROVAL OF THE MINISTER OF FINANCE The Minister of Finance has approved Barclays application to acquire a majoritystake in Absa pursuant to the requirements of the Banks Act, 1990 and theMinister of Finance has, under Section 18(2) of the Competition Act, excludedthe jurisdiction of the Competition Authorities. As part of the Banks Act approval process, Barclays has confirmed its long-termcommitment to investing in South Africa pursuant to the Recommended Acquisitionand its intention to retain a controlling stake in Absa. Further, whilst a key goal of the transaction is to bring Barclays world-classproduct capabilities, global banking expertise and international reach toAbsa's business, Barclays has acknowledged the importance of maintaining theSouth African character of Absa and the significant contribution Absa wouldmake to Barclays international strategic goals. In this regard, it is intendedthat the present Chairman of Absa, Dr. Danie Cronje, will continue to serve asChairman of Absa and would become a non-executive director of Barclays andBarclays PLC and Dr. Steve Booysen will remain in his current position as GroupChief Executive of Absa. Three Barclays representatives will be appointed tothe Absa board. Absa and Absa Bank Limited will remain South Africanincorporated companies with Absa's primary listing on the JSE. Both Barclays and Absa already have strong black economic empowerment ("BEE")policies, including Absa's ownership arrangements with Batho Bonke. Barclayshas confirmed its intention to retain these policies to reflect its strongcommitment to the Financial Sector Charter. Barclays has also confirmed its intention for Absa to maintain best practicecorporate governance standards, compliance with laws and regulations and aclose ongoing relationship with Absa's regulators. These objectives would besupported where appropriate through the Barclays representatives on the Absaboard. CONDITIONS PRECEDENT TO WHICH THE RECOMMENDED ACQUISITION WILL BE SUBJECT The Scheme The Scheme will, in addition to the statutory conditions set out in theCompanies Act, be subject to the fulfilment or waiver of conditions precedentrelating to the following matters, all by no later than the Long Stop Date (asdefined below): - the Recommended Offer being declared unconditional as to acceptances,which will occur on or before the sanctioning of the Scheme by the Court;- all necessary regulatory approvals to effect the Recommended Acquisitionhaving been granted or deemed to have been granted, provided that if anyapproval is qualified or conditional, this condition would only be deemedto be fulfilled if both Absa and Barclays agree to the qualification orcondition and undertake in writing to each other to abide by suchqualification or condition; except that where a qualification or conditionrelates only to Barclays (and not to the Absa group following theintegration as described below in the section headed "Integration ofBusinesses, Including Barclays Africa"), Barclays alone can consent to suchqualification or condition;- the independent Shareholders passing, to the satisfaction of Barclays, anordinary resolution waiving the requirement under the Code for Barclays tomake a mandatory offer to all Shareholders for all of their Absa shares(provided that this resolution will not be implemented unless, in addition,a simple majority of the independent Ordinary Shareholders vote in favourof this resolution); and ordinary resolutions necessary to approve theappointments to the Absa board described below in the section headed"Staff, Management and Boards";- by no later than five business days prior to the scheduled Court hearingdate to sanction the Scheme, no materially adverse circumstance relating tothe financial or business affairs of Absa having arisen;- prior to the scheduled Court hearing to sanction the Scheme, Absa nothaving undertaken or allowed to occur any unusual corporate action orfrustrating action; and- there being no change nor proposed change in any law, regulation or policyof the Republic of South Africa on or before five business days prior tothe scheduled Court hearing date to sanction the Scheme, which wouldrestrict Barclays ability to transmit freely capital injected into, and/ordividends paid out by, Absa into foreign exchange and to remit it offshore. The Long Stop Date is 31 August 2005, but as long as the Scheme Meeting hasbeen held on or before 15 July 2005 this will be extended to 31 October 2005 ifas at 31 August 2005 the only outstanding condition is the Scheme becomingeffective. The Recommended Offer The Recommended Offer will be subject to the fulfilment or waiver of conditionscovering the following matters, both by no later than the Long Stop Date: - Ordinary Shareholders tendering such number of Absa Ordinary Shares in theRecommended Offer which, when accepted by Barclays, would result in itholding 56.5%* of all Absa Ordinary Shares (taking into account shares tobe acquired pursuant to the Scheme and any on-market purchases byBarclays), and Sanlam and Remgro each tendering their Absa Ordinary Sharespursuant to the undertakings which they have given in favour of Barclays;and- the order of the Court sanctioning the Scheme being registered by theRegistrar of Companies. * See explanation of this figure under the section headed "Terms OfThe Recommended Acquisition" above. The Scheme and the Recommended Offer are therefore each conditional upon theother, such that either both of them will become effective or neither willbecome effective. INTEGRATION OF BUSINESSES, INCLUDING BARCLAYS AFRICA Both the Absa and Barclays Boards support the vision of creating the pre-eminentbank on the African continent and have agreed in principle, as soon asreasonably possible after the completion of the Recommended Acquisition: - to integrate, subject to regulatory approval, Barclays South Africa andother Barclays African businesses (being Botswana, Ghana, Kenya, Mauritius,Seychelles, Tanzania, Uganda, Zambia and Zimbabwe; but excluding Egypt andUnited Arab Emirates) with Absa; and- to integrate, subject to regulatory approval, as appropriate, Absa'sinternational businesses in London, Germany, Hong Kong and Singapore withBarclays. It is anticipated that this process, which is subject to regulatory and otherapprovals, will be embarked upon as soon as practicably possible. Barclays has operated in Africa for nearly 100 years and is the leadinginternational bank in the region. This business includes operations in tencountries (including Barclays South Africa) which generated approximatelyR1.3 billion of pre-tax profits for the year ended 31 December 2004 and hadtotal assets amounting to approximately R44.4 billion, with 1.2 million retailand business/wholesale customer accounts served by 6 200 employees and 230branches. The terms of any integration transactions will be on an arm's length basis,with full particulars in respect of such transactions being disclosed at therelevant time. The terms and structure of the integration transactions(including the consideration payable) would need to be determined. Theconsideration may constitute cash, Absa Ordinary Shares or a combinationthereof. The financial effects of the integration transactions on AbsaShareholders will be properly disclosed at the time of the transactions. Theintegration transactions will also, where required, be supported by anindependent fairness opinion and will be subject to any necessary independentshareholder (i.e. excluding Barclays), Board and regulatory approvals. STAFF, MANAGEMENT AND BOARDS Barclays and Absa believe that Absa's management team has built the leadingretail banking franchise in South Africa by leveraging its strong local marketknowledge and expertise. Going forward, management would be combined by drawingon the strength and talents of each organisation, while making use of Barclaysconsiderable international skills and capabilities. No significant staffreductions are anticipated as a consequence of the Recommended Acquisition. To ensure that there is continuity and alignment of management between Absa andBarclays post implementation of the Recommended Acquisition, it is intended,subject to any required regulatory clearance where applicable, that: - the present Chairman of the Absa Board Dr. Danie Cronje will continue toserve as Chairman;- Dr. Steve Booysen will remain in his current position as Group ChiefExecutive of Absa and will join the Barclays senior leadership group andBarclays International Retail and Commercial Banking Executive Committee;- the Absa Board will be of a similar size to the Absa Board on the closingdate of the Recommended Acquisition, with four executive directors includingthe three current executive directors, and with a majority of independentdirectors;- Mr. Dominic Bruynseels, currently Chief Executive of Barclays Africa, willserve as an executive director of Absa and of Absa Bank Limited;- Barclays will nominate two new non-executive directors to the Boards ofAbsa and Absa Bank Limited, who will be Mr. David Roberts, director ofBarclays PLC and Chief Executive of Barclays International Retail andCommercial Banking and Mr. Naguib Kheraj, Group Finance Director ofBarclays PLC;- a Barclays nominated non-executive director will be appointed to each of thekey committees of the Absa and Absa Bank Limited Boards;- Dr. Danie Cronje will become a non-executive director of Barclays PLC andBarclays Bank PLC; and- Sanlam and Remgro will procure that their nominees to the Boards of Absaand Absa Bank Limited resign as directors of Absa and Absa Bank Limitedwith effect from the settlement date of the Recommended Acquisition. The proposed changes to the Absa Board will be made in compliance with bestmarket practice in South Africa in relation to corporate governance, includingthe provisions of the Banks Act and the requirements of the King Reports onCorporate Governance for South Africa. BATHO BONKE AND THE ABSA ESOP TRUST SUPPORT AND UNDERTAKINGS Barclays is committed to the continuing transformation of South Africa andregards the Financial Sector Charter as a key element of that transformation.Both Absa and Barclays already have strong BEE policies and any merger of theirbusinesses would see the retention of these policies. Batho Bonke, a broad-based BEE consortium, and the Absa ESOP Trust holdredeemable cumulative option holding preference shares in Absa (the "PreferenceShares"). The Preference Shares currently confer the right on the holdersthereof to exercise 10.7% of all voting rights at any general meeting of Absaand to subscribe, between the first business day after 1 July 2007 and 1 July2009 at an option strike price, for 10.7% of the enlarged issued ordinary sharecapital of Absa. Barclays has received written notices from Batho Bonke and the Absa ESOP Trustin terms of which they (i) confirm that they are contractually restricted bytheir prior arrangements with Absa from selling their Preference Shares at thistime; (ii) support the Recommended Acquisition; (iii) waive their rights tohave the Scheme extended to their Preference Shares; and (iv) undertake to voteall of their shares in favour of all the resolutions to be proposed inconnection with the Recommended Acquisition, including resolutions waiving therequirement to make a mandatory offer to all shareholders under the Code andthose necessary to make the appointments to the Absa Board described above inthe section headed "Staff, Management and Boards" (collectively the"Resolutions"). Accordingly Batho Bonke and the Absa ESOP Trust are notparticipants in the Scheme but the Recommended Offer is made to them. SUPPORT AND UNDERTAKINGS FROM KEY SHAREHOLDERS TO VOTE IN FAVOUR OF THE SCHEMEAND ACCEPT THE RECOMMENDED OFFER Barclays has received written expressions of support for the RecommendedAcquisition from a number of Ordinary Shareholders, including Sanlam andRemgro, representing in aggregate approximately 63% of the Ordinary Shares.Amongst these, Absa's two largest Ordinary Shareholders, Sanlam and Remgro,accounting for 28% of Absa's Ordinary Shares in aggregate, have also given awritten undertaking to vote all of their shares in favour of the Scheme and totender all their Ordinary Shares. It should be noted that the tender by Sanlam of its shares and its ability tovote in favour of the Scheme is subject to Sanlam shareholder approval. TheBoard of Sanlam has agreed to recommend that its shareholders vote in favour ofthe relevant resolution at the Sanlam shareholder general meeting which will becalled for this purpose. It is envisaged that the meeting will be held on9 June 2005. The undertakings provided by Sanlam and Remgro require theRecommended Offer to be made before 8 June 2005 and do not prevent Sanlam orRemgro benefiting from a higher offer price nor from accepting a materiallybetter alternative offer from another offeror. Barclays will not be obliged toaccept all the Absa Ordinary Shares tendered by Sanlam and Remgro, but willtreat the Absa Ordinary Shares tendered in excess of Sanlam and Remgro's BasicEntitlement in the same way as excess tenders by all other OrdinaryShareholders will be treated. BRANDING Barclays and Absa intend capitalising on the respective strengths of each ofthe Absa and Barclays brands. EFFECT OF THE TRANSACTION ON BARCLAYS The anticipated financial impact of the Recommended Acquisition is positive forBarclays. The Recommended Acquisition is expected to create value, withprojected earnings per share accretion from completion of the RecommendedAcquisition and expected positive economic profit in the first full yearfollowing completion. At 31 December 2004 Barclays had a tier one capital ratio of 7.6% and a riskasset ratio (i.e. total capital ratio) of 11.5%. Barclays intends to fund thetransaction from a combination of available resources and preference sharefinance. Based on the most recent reported financials and assuming a holding of60% of the Ordinary Shares, it is expected that the transaction and associatedpreference share issuance will result in approximately a 60 basis pointreduction in Barclays tier one capital ratio and risk asset ratio (i.e. totalcapital ratio). OPINION AND RECOMMENDATION OF THE BOARD OF ABSA N M Rothschild & Sons (South Africa) (Pty) Ltd, as the independent financialadvisor to the Board of Absa, is of the opinion that the terms of theRecommended Acquisition are fair and reasonable to Shareholders. The full textof that opinion will be included in the circular to be posted to Shareholdersin due course. The Board of Absa (excluding Dr. J. van Zyl and Mr. P.T. Motsepe,being nominee directors of Sanlam, and Mr. T. van Wyk, being a nominee directorof Remgro, who recused themselves) has considered this opinion and the terms ofthe Recommended Acquisition, and having taken into account, among other things,financial advice received from Goldman Sachs International, is of the opinionthat the terms of the Recommended Acquisition are fair and reasonable toShareholders and are in the best interests of Shareholders as a whole and hasunanimously recommended that Shareholders (excluding Batho Bonke and the AbsaESOP Trust) accept the Recommended Offer, and that Shareholders vote in favourof the Scheme and the Resolutions. Merrill Lynch International and AbsaCorporate and Merchant Bank have also acted as financial advisors to Absa. FINAL DIVIDEND Absa is simultaneously with this announcement releasing an announcement on theSecurities Exchange News Service ("SENS") and in the press that it has declareda final dividend of R2.00 per Absa Ordinary Share for the financial year ended31 March 2005 to be paid on 27 June 2005 to Ordinary Shareholders on theregister on the Record Date for the Final Dividend. BARCLAYS GROUP HOLDINGS IN ABSA Barclays Global Investors Limited ("BGI") holds 356 822 Absa Ordinary Shares(representing 0.06% of the Absa Ordinary Shares in issue) on behalf of itsasset management clients. On 27 October 2004 BGI sold 126 700 Absa shares (representing 0.02% of the AbsaOrdinary Shares in issue) at a price of R65.40 per share. On 18 February 2005,Barclays Global Investors N.A effected a trade on behalf of a client for 51 100Absa ordinary shares (representing 0.008% of the Absa Ordinary Shares in issue)at a price of R75.94 per share, where ownership of the shares vested with theclient. The abovementioned transactions have been reported in accordance withthe Code. CONFIRMATION OF FINANCIAL RESOURCES JPMorgan has furnished confirmation to the Securities Regulation Panel (the"SRP") that Barclays has resources available sufficient to satisfy fullimplementation of the Recommended Acquisition. WEBSITE All relevant shareholder documentation and related materials in connection withthe Recommended Acquisition will be made available on the Absa website(www.absa.co.za) and the Barclays website(www.investorrelations.barclays.co.uk).In addition, details of any on-market purchases by Barclays of Absa OrdinaryShares will be made available on the Barclays website. SHAREHOLDERS OUTSIDE OF SOUTH AFRICA The Recommended Acquisition may be affected by the laws of the relevantjurisdiction of those shareholders who are not South African residents ("Non-Resident Shareholders"). Such Non-Resident Shareholders should informthemselves about and observe any applicable legal requirements of suchjurisdictions. It is the responsibility of any Non-Resident Shareholder tosatisfy himself/herself as to the full observance of the laws and regulatoryrequirements of the relevant jurisdiction, in connection with the RecommendedAcquisition, including the obtaining of any governmental, exchange control orother consents or the making of any filing which may be required, thecompliance with other necessary formalities and the payment of any issue,transfer or other taxes or other requisite payments due in such jurisdiction. The Recommended Acquisition will comply with and be governed by the laws ofSouth Africa and will be subject to any other applicable laws and regulationsincluding Regulation E of the United States Exchange Act. This announcement does not constitute an offer to sell or an invitation topurchase any securities or the solicitation of an offer to buy any securities,pursuant to the Recommended Acquisition or otherwise. The Recommended Offer will be made solely by way of the shareholder circular tobe dispatched in due course which will include details of how the RecommendedOffer may be accepted. The Recommended Offer will not be made in or into Canadaor any other jurisdiction in which it is unlawful to make such an offer. Anyacceptance received from Canada or any other jurisdiction where suchRecommended Offer is illegal, may render invalid any purported acceptance ofthe Recommended Offer. In terms of Canadian law, shareholders with registeredaddresses in Canada may also not vote at the Scheme Meeting. Any Absa Shareholder who is in any doubt as to their position, including,without limitation, their tax status, should consult an appropriate independentprofessional adviser in the relevant jurisdiction without delay. IMPORTANT DATES AND TIMES A circular containing full details of the Recommended Acquisition (includingall terms and conditions of the Scheme and Recommended Offer) will be posted toShareholders on or about 20 May 2005, following the convening of the SchemeMeeting by the Court. The Recommended Offer will remain open from 20 May 2005 to 8 July 2005 (the"Closing Date"), save in the event that, with the approval of the SRP and Absa,the sanction date of the Scheme is extended beyond the date set out below, inwhich event an announcement concerning the revised Closing Date will bereleased on SENS and published in the Press. Shareholders should note the following important dates and times: SALIENT DATES AND TIMES 2005 Firm Intention Announcement Monday, 9 May Declaration of Final Dividend Monday, 9 May Recommended Offer opens Friday, 20 May Release of Absa's annual results for the year Monday, 30 Mayended 31 March 2005 on SENS Publication of Absa's annual results for the Tuesday, 31 Mayyear ended 31 March 2005 in the Press Last day to trade in Absa shares in order to Thursday, 2 Junebe recorded in the Register to be able to vote at the Scheme Meeting Latest time and date for Forms of Proxy for the General Meeting to be lodged at 12h00 on Thursday, 9 June Scheme Voting Record Date at 17h00 on Thursday, 9 June Latest time and date for Forms of Proxy for the Scheme Meeting to be lodged at 11h00 on Friday, 10 June Scheme Meeting of Absa to be held at 11h00 on Monday, 13 June General Meeting of Absa Shareholdersto be held at 12h00 (or after conclusion of the Scheme Meeting) on Monday, 13 June Results of the Scheme Meeting released on SENS Monday, 13 June Results of General Meeting released on SENS Monday, 13 June Results of Scheme Meeting published in the Press Tuesday, 14 June Results of General Meeting published in the Press Tuesday, 14 June Last day to trade in Absa Ordinary Shares on the Friday, 17 JuneJSE to be eligible to participate in the final dividend (see note 4 below) Absa Ordinary Shares will trade "ex" the Final Monday, 20 JuneDividend Court hearing to sanction the Scheme Tuesday, 21 Juneat 10:00 (or as soon after that as counsel may be heard) Record Date for the Final Dividend Friday, 24 June Payment of the Final Dividend Monday, 27 June IF THE SCHEME IS SANCTIONED Finalisation date announcement that the Scheme and the Recommended Offer are unconditional in every respect released on SENS Tuesday, 21 June Finalisation date announcement that the Scheme and the Recommended Offer are unconditional in every respect published in the Press Wednesday, 22 June Last day to trade in Absa Ordinary Shares on the JSE in order to be recorded in the Register to be able to receive the Scheme Consideration Friday, 1 July Last day to trade in Absa Ordinary Shares on the Friday, 1 JulyJSE to be eligible to participate in the Recommended Offer Scheme Consideration Record Date Friday, 8 July Record Date (for purposes of participating in theRecommended Offer) at 12:00 on Friday, 8 July Closing Date for Recommended Offer at 12:00 on Friday, 8 July Results of the Recommended Offer released on Monday, 11 JulySENS Scheme Operative Date Monday, 11 July Dematerialised Scheme Participants will have theirrelevant account with their CSDP or Broker debitedwith the Absa Ordinary Shares disposed of pursuantto the Scheme Scheme Consideration Settlement Date Wednesday, 13 July Scheme Consideration posted to Certificated SchemeParticipants (if Documents of Title are received on orprior to the Scheme Consideration Record Date) ordeposited directly into their bank accounts shouldthere be an existing mandate Dematerialised Scheme Participants will have theirrelevant account with their CSDP or Broker creditedwith the Scheme Consideration Recommended Offer Consideration Settlement Date Wednesday, 13 July Dematerialised Recommended Offer Participants willhave their relevant account with their CSDP or Brokerdebited with the Absa Ordinary Shares disposed ofpursuant to the Recommended Offer Dematerialised Recommended Offer Participants willhave their relevant account with their CSDP or Brokercredited with the Recommended Offer Consideration Certificated Recommended Offer Participants willhave cheques issued, or any payment depositeddirectly into their bank accounts should there be anexisting mandate, for the Recommended OfferConsideration in respect of acceptances of theRecommended Offer (if Documents of Title arereceived on or prior to the Record Date) and balancecertificates will be posted 1. These salient dates and times are subject to amendments as permitted by theCode or applicable law. Any relevant amendments will be released on SENS andpublished in the Press, as appropriate. 2. Shareholders are reminded that, because the Recommended Offer isconditional, should they accept the Recommended Offer by the Closing Date,they will not be able to trade their Absa shares tendered from the date theyaccept the Recommended Offer, unless and until the Recommended Offer lapses. 3. On account of the final dividend, Absa Ordinary Shares cannot bedematerialised or rematerialised between Monday, 20 June 2005 and Friday, 24June 2005, both days inclusive. On account of the Scheme and the RecommendedOffer, Absa Ordinary Shares cannot be dematerialised or rematerialisedbetween Monday, 4 July 2005 and Friday, 8 July 2005, both days inclusive. 4. Ordinary Shares acquired after 17 June 2005 (being the last day to trade inorder to participate in the final dividend) but on or before 1 July 2005(being the last day to trade in order to participate in the RecommendedAcquisition)will not receive the final dividend, but will be entitled toparticipate in the Recommended Acquisition. 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 relianceon them. Factors that could cause the actual results, performance or achievements ofAbsa or 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 synergiesfrom the acquisition; the inability to obtain all necessary approvals,including regulatory approvals, for the Scheme or Recommended Offer or anyintegration transactions; the economic environment of the industries in whichAbsa and Barclays operate; and the political environment of the countries inwhich Absa and Barclays operate. Forward-looking statements involve known andunknown risks and uncertainties and other factors which may cause the actualresults, performance or achievements of Absa or Barclays, or the industries inwhich they operate, to be materially different from any future results,performance or achievements expressed or implied by such forward- lookingstatements. The information in this Announcement is made as of the date hereof and Absaand Barclays have no obligation to update the information. All written and oralforward-looking statements attributable to Absa and Barclays or personsacting on their behalf are qualified in their entirety by these cautionarystatements. 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 2930/2927 Media 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 Johannesburg9 May 2005 Financial advisors to Absa Financial advisors to BarclaysGoldman Sachs International JPMorganMerrill Lynch International Barclays CapitalAbsa Corporate & Merchant Bank Attorneys to Absa Attorneys to BarclaysWebber Wentzel Bowens Deneys Reitz Inc. International Attorneys to Absa International Attorneys to BarclaysLinklaters Clifford Chance LLP Independent Advisor to Absa's Board N.M. Rothschild This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Barclays