Barclays- Absa combine operations in Africa

barclays absa photoFurther to the announcement on 21 August 2012, Barclays Bank PLC (“Barclays”) and its subsidiary Absa Group Limited (“Absa”) are pleased to announce their agreement to combine the majority of Barclays Africa operations (the “Portfolio”) with Absa.

The proposed combination accelerates Barclays ‘One Bank in Africa’ strategy and its goal to become the ‘Go-To’ bank on the continent. The combined business will create a leading pan-African financial services business and a platform for further growth.

The combined, JSE-listed business will serve approximately 14.4 million customers through a network of more than 1,300 outlets and over 10,400 ATMs, employing more than 43,000 people across ten² countries which represent approximately 22.5% and 30.5% of Africa’s population and GDP respectively.

The proposed strategic combination will be effected by way of an acquisition by Absa Group Limited of Barclays Africa Limited, the proposed holding company of the Portfolio, for a consideration of 129,540,636 Absa ordinary shares, representing a value of R18,33bn³ (£1.3bn¹) for Barclays Africa Limited.

As a result of the transaction, Barclays stake in Absa will increase from 55.5% to 62.3%.

It is expected that Barclays Africa Limited will hold, at the effective date of the proposed combination, all or a significant majority of the Portfolio, comprising Barclays ownership interests in banking operations in Botswana (67.8%), Ghana (100%), Kenya (68.5%), Mauritius (100%), Seychelles (99.8%), Tanzania (100%), Uganda (100%) and Zambia (100%), as well as the Barclays Africa Regional Office in Johannesburg (100%).

 

The listing of Barclays Bank Kenya Limited (on the Nairobi Securities Exchange) will continue to be maintained as only the shares held by Barclays in the entity will be transferred in the proposed combination. The proposed combination will not impact the number of shares held by the minorities in Barclays Bank Kenya Limited.

 

Absa will continue to own 100% of Absa Bank Limited, 95.8% of Barclays Bank of Mozambique and 55% of the National Bank of Commerce in Tanzania.

 

The scope of the proposed transaction excludes Barclays operations in Egypt and Zimbabwe.

 

To reflect the enlarged portfolio and the pan-African focus of the business, Absa Group Limited will be renamed “Barclays Africa Group Limited” and the composition of the Board of Absa Group will be reconstituted accordingly.

 

It is currently intended that the Absa brand will continue to be used for retail banking and card businesses in South Africa.

 

Each business within the Portfolio is led by an experienced management team and Board of Directors in country.

 

The proposed combination is expected to complete in the first half of 2013, subject to fulfilment of the conditions precedent, including regulatory approvals across the affected jurisdictions.

The approval of the transaction by Absa shareholders, excluding Barclays, will also be required.

The independent directors of the Absa Board have unanimously approved the proposed transaction and a fairness opinion has been provided.

It is a condition precedent to the proposed combination that, subject to the applicable regulatory approvals, at least the operations in Botswana, Ghana, Kenya and Mauritius, as well as the Barclays Africa Regional Office, are transferred to Barclays Africa Limited by the first closing date. The remaining companies in the Portfolio that have not transferred to Barclays Africa Limited by such closing date will become the subject of subsequent closings.

The proposed combination follows on from the steps taken by Absa and Barclays in 2011 to integrate their African businesses from an operational and management point of view. This initially involved consolidating the regional offices for Absa Africa and Barclays Africa in Johannesburg and establishing a combined Africa management oversight team, as well as introducing a global product strategy across the continent.

Maria Ramos, Chief Executive of Absa Group and Barclays Africa, said: “This is a compelling and unique opportunity for us to further our ‘One Bank in Africa’ ambitions by combining with a leading sub-Saharan African banking franchise. We are tremendously excited by the opportunities for growth across the continent and the geographically diversified earnings potential that a combined business would deliver.”

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