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Monday, March 1, 1999
At last…

A it turns out, the on-again, off-again courtship of Standard Bank and Liberty Life is eventually to end up in marriage. It was announced early February that, yet again, merger negotiations had resumed. Last year Liberty Life was blamed for allowing the R80 billion merger talks to fail, following differences of opinion on the relative valuations each had of the other group.
There were recent predictions that, as a result, Liberty would sell part or its entire 41 % stake in Stanbic to Old Mutual. Since then it has been announced that founder and chairman of Liberty Life Donald Gordon is to retire in June this year. In addition, it has been suggested that this removes “the single biggest obstacle to the potential merger” — though see background notes below.
Later it was announced that Stanbic had taken control of Liberty Life through a R5 595m purchase of Liberty Investors’ (Libvest) 50% stake in unlisted Liblife Controlling Corporation (LCC). LCC is the company through which the Gordon family and Stanbic have exercised joint control over the life group since 1983. LCC now becomes a wholly owned subsidiary of Stanbic, which paves the way for a rationalisation of the group. The deal was effective 1st January 1999.
According to official documentation, “the vision of a merged Stanbic/Liberty Life group includes the creation of a listed holding company with two wholly-owned subsidiaries in banking and life assurance.” Speculation in the daily press suggested that the listed holding company would be chaired by Conrad Strauss, with the two wholly owned subsidiaries: banking, chaired by Mike Vosloo; and, life assurance, chaired by Roy Andersen.
Since late last year, Liberty has been pursuing ‘unbundling’ of some of its interests. Liberty Strategic Investments (Libsil) for example, was delisted from the JSE and the value distributed amongst the shareholders. First International Trust, the holding company for Liberty’s offshore interests, was also delisted.
Background
Donald Gordon founded the Liberty Life Group, and was appointed Chairman in 1957. He was the appointed Chairman of Libvest at the time of its listing in 1986. It is anticipated that following his retirement as Chairman of the Group after 42 years, Mr Gordon will assume the role of Honorary President for life of the Liberty Life Group.
Mr Gordon will continue as Chairman of Liberty International Holdings PLC and Capital Shopping Centres PLC, both listed on the London Stock Exchange.
Liberty Life’s market capitalisation now exceeds R26 billion, and it has 8 000 employees, agents and brokers throughout the country.
In one of its announcements Stanbic explained that, “As shareholders have been aware over many years, in 1983 Mr Gordon sought to introduce an institutional shareholder that would become the anchor of the Liberty Life Group and provide it with stability after his retirement. In accordance with this objective, a joint control agreement was entered into with Stanbic in 1983.
“Now that Mr Gordon has decided to retire, the contemplation embodied in the joint control agreement with Stanbic is being implemented.”
For some time now, Stanbic and the Liberty Life Group have been considering ways to take advantage of the considerable current and potential synergies that exist between the two groups. The LCC acquisition is seen as the first step in unlocking these significant benefits.
Subsequent to the implementation of the LCC acquisition, Stanbic and Liberty Life will continue to conduct their day-to-day operations on an in- dependent basis. They will, however, immediately begin to explore profit- able areas of mutual co-operation, such as bancassurance.
Discussions have been held he- tween the respective senior management teams of Stanbic and Liberty Life that reaffirmed their consensus of last year that a merger between the companies would be an appropriate mechanism through which to maximise benefits.
Discussions between Stanbic, Libhold and Liberty Life as to the terms of the proposed merger will commence in the near future. If successful, it should be possible to complete the proposed merger during the course of 1999, subject to the requisite approvals of the boards of directors of the various companies and, where necessary, shareholder approval. By Nigel Benetton

Copyright © Insurance Times and Investments® Vol:12.2 1st March, 1999
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