Imperial shareholders warming up to R12.7 billion cash bid by DP World

The integration of the companies would create a unified financial service powerhouse

LIBERTY Holdings’ share price leapt to a year-high of R85 a share on the JSE yesterday morning after Standard Bank announced its intention to buy the shares that it does not already own in the financial services group for about R11 billion.

Standard Bank owns 54 percent of Liberty Holdings.

Standard Bank said the integration of the companies would create a strong and established, unified financial services powerhouse in Africa.

The offer would be made through a combination of Standard Bank shares and a cash consideration, representing a premium of more than 32 percent to Liberty’s current share price.

The deal is subject to shareholder and regulatory approvals, and it will lead to the de-listing of Liberty.

If the transaction is implemented, Liberty’s minority shareholders will receive a cash consideration of R25.50 a share, together with 0.5 Standard Bank shares per Liberty share held.

Standard Bank chief executive Sim Tshabalala said the integration of Liberty into Standard Bank would enhance their ability to meet their clients’ financial needs.

“This transaction creates significant opportunities for capital efficiencies and to grow the united group by providing a fully integrated set of client offerings throughout Standard Bank’s operations across Africa,” Tshabalala said.

Mike Gresty, a fund manager and analyst at Anchor Capital, said given the market’s depressed valuation of Liberty prior to the announcement, it was an opportune time for Standard Bank to make a bid.

“Looking at the rationale, I would concur with this deal simplifying the structure, removing the need for a formal bancassurance agreement between the two and removing the need to worry about minority shareholder interests in Liberty. No doubt, there is a saving in compliance and listing costs, so efficiencies to extract through a full buy-out,” Gresty said.

However, Gresty said he was less certain that this step would dramatically transform the bancassurance opportunity for the group.

“It is certainly not a regressive step, but bancassurance seems to have been a model that has often fallen short of its theoretical potential in practice. I find myself asking the question what they will now achieve together that they have been unable to do successfully in the many years in which they have had to perfect the existing relationship,” Gresty said.

He said the share price surge was merely the result of the offer made by Standard Bank equating to a premium of 40 percent to the price at which Liberty was trading before.

Liberty’s share price gained more than 25 percent to R85 a share, up from Wednesday’s closing price of R67.48.

Nesan Nair, a senior portfolio manager at Sasfin Securities, said he did not see the transaction coming.

“Standard Bank had the majority holding in Liberty forever, and I always perceived it as a thorn in their side. They have often experienced massive earnings volatility as a result of Liberty’s performance, and that bancassurance model has not really worked – whether it was Sanlam/Absa, Nedbank/Old Mutual and FirstRand/ Momentum – I don’t know – maybe we are going full circle back to this kind of thinking,” Nair said.

He said, however, one thing was certain: “The insurers are dirt cheap – cheaper than the banks – essentially because of the economy, employment, Covid-19 and, recently, rioting.”