It needed scale and has bought it
DISCOVERY’S ACQUISITION of Britain’s Southern Life Healthcare (SLH) is a deal the South African company needed to happen. Without it, Discovery – which has a six-year-old loss-making joint venture with British insurance giant Prudential – could have continued plodding along for a year or more but would ultimately have had to withdraw from that market. It simply wasn’t attaining the scale it required organically.
Still smarting from its withdrawal from the United States and the resultant R1bn write-down on its Destiny venture, pulling out was simply not an option for Discovery, which has built a R20bn business in South Africa in just a decade and a half. It needed a turbo boost in Britain and is hoping the SLH deal will provide it with the scale it requires to develop a decent bridgehead in a difficult market dominated by two large independents and, by South African standards, a well-funded public health system.
It’s funding the R1,56bn acquisition of the established, profitable health insurer from local resources. The new entity will have a membership base of 700 000 and