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Momentum/Metropolitan merger proceeds MMI Holdings created

Published: Aug 26, 2010 8:00:00 AM South Africa Standard Time

FirstRand, Momentum and Metropolitan today announced that they have reached agreement on the final terms to proceed with the merger of Metropolitan and Momentum, which will create the third largest listed insurer in South Africa with an embedded value of around R30 billion.

In a joint statement today, the parties announced that Momentum CEO, Nicolaas Kruger, will become the CEO of the merged entity, which will be renamed MMI Holdings Limited. Metropolitan CEO, Wilhelm Van Zyl, will be the Deputy CEO.

The board of MMI Holdings was also announced. The chairman and deputy chairman will be Laurie Dippenaar and JJ Njeke respectively, whose appointments will be for one year. In total there will be four executive directors and sixteen non-executive directors.

The name MMI Holdings will only apply to the listed entity. The brands of Momentum and Metropolitan will continue to be used in the client-facing businesses, where both have established strong and trusted legacies.

Commenting, Kruger said, "The management teams of Metropolitan and Momentum are confident of the potential of MMI Holdings. The combination of the two businesses, which have created powerful franchises in complementary market segments, represents a compelling growth story that provides all stakeholders with a wealth of exciting prospects."

Kruger added, "Not only will the merger generate economies of scale and other business synergies, including wide-ranging cross-selling opportunities, but it will also result in enhanced capital efficiencies and greater risk diversification".

Following the completion of one of the most comprehensive due diligence processes in South African corporate history, the merger ratio is now confirmed based on the consistently calculated embedded values of the two entities as at 31 December 2009.

Following implementation of the merger, FirstRand shareholders will hold 59.3% and current Metropolitan shareholders 40.7% of the share capital of the merged entity. Based on this ratio, when FirstRand's stake in the merged entity is unbundled, FirstRand shareholders can expect to receive 16.9 shares in the merged entity for every 100 ordinary shares held in FirstRand.

In focusing on the contributions made by everyone involved in the merger process, Van Zyl said, "I am very proud of the commitment shown by staff in finalising this complex transaction. My hopes for MMI Holdings are high as I do not doubt its capacity and capabilities to exceed stakeholder expectations through expanded product offerings in extended local and international target markets".

Both the merger and the unbundling remain subject to shareholder approval at general meetings that will take place on 28 September 2010, as well as approval by the Competition Tribunal and other regulatory bodies.

Detailed cautionary announcement 31 March 2010
Detailed terms announcement 26 August 2010

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