Finance firms merger deal expected in June

Shakeman Mugari

THREE financial companies – Southern Africa Reinsurance Company (Sare), First Bank Corporation (FBC), and National Discount House (NDH) – will only conclude their merger deal in the second qu

arter of this year, according to one of the companies in the talks.


FBC led by Livingstone Gwata this week said they anticipated that the deal would be concluded around June this year if all goes according to plan.


According to First Bank the deal still has three hurdles before it is finalised.

“Once the due diligence exercise is complete the board debates and recommends the deal to shareholders who will be requested to decide on the transaction in the next few weeks,” explained FBC.


But the actual tie-up will be sometime in June after the respective extraordinary general meetings.


This is despite reports that business mogul Mutumwa Mawere who has a major say in the direction of the deal is against the merger.


Sare and FBC this week issued cautionary statements indicating that their talks were at an advanced stage.


The cautionary statements, which appeared spontaneously and were similar, announced that the two companies had sought regulatory approval for the transaction.


“The shareholders of Southern Africa Reinsurance Company Ltd (Sare) are advised that negotiations referred to in our previous Cautionary Notice of March 2 are at an advanced stage and due diligence exercise is almost complete,” said Sare in a statement this week. “Regulatory approvals are simultaneously sought.”


First Bank also issued a statement along the same lines.

The firms are understood to have contracted KPMG to carry out a valuation of the deal.


PricewaterhouseCoopers is also involved in the due diligence reports that are likely to be released within the next few weeks.


NDH group chief executive Ernest Matienga said it was difficult to put a time-frame to the deal.


He said the period of conclusion depended on how fast the firms went through logistical issues such as seeking shareholder and regulatory approval.


Sare still has to get approval from the Commissioner of Insurance.

Matienga said if the tie-up is concluded it would mean that NDH shareholders have equity listed on the stock exchange.


“In the merger there are likely to be share swaps and NDH shareholders will have a stake in the listed shares,” said Matienga. “It means going around such a rigorous exercise like the Initial Public Offer. It also means we have a bank within the group.”


NDH would benefit from the large pool of funds that comes from Sare and FBC.


Sare management chose to remain mum on the deal saying the memorandum of understanding they signed with the other parties binds them. They are also bound by the stringent Zimbabwe Stock Exchange regulations. Sare is led by Christopher Gomwe.


According to sources either Sare or FBC would have to delist from the local bourse. The three companies would then come under one listed holding entity.

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