Sanlam Limited has acquired Merchant Securities Group

Lincoln International (“Lincoln”), a leading global mid-market investment bank, advised South African Sanlam Limited (“Sanlam”) on the recommended cash offer for AIM-listed Merchant Securities Group plc (“Merchant”) by its U.K. subsidiary Sanlam Private Investment Holdings U.K. Limited (“SPIH”). This transaction represented the first takeover offer of a financial services firm following material changes to the U.K. Takeover Code, effective from 19 September 2011. In addition, the acquisition also required regulatory approval by both the U.K.’s Financial Services Authority and Sanlam’s regulator, the South African Reserve Bank.

The offer price of 22 pence in cash valued the entire issued and to be issued ordinary share capital of Merchant at £12.2 million. To support the transaction, Lincoln secured irrevocable undertakings covering 31% of Merchant shares. In addition, terms were agreed with the management team of Merchant to exchange a majority of their existing shareholding for 25% of the shares in SPIH. As these arrangements fall under Rule 16 of the takeover code, Rule 16 opinions as well as a General Meeting were required to secure shareholder approval for the proposed arrangements.

Merchant provides a range of financial services to private clients, institutions and small businesses. Its advisory and execution services will be an important building block in expanding the capabilities of Sanlam’s existing U.K. operations, whilst the stockbroking, corporate finance, private equity and wealth management activities of Merchant will complement Sanlam’s wealth management activities and should lead to cross-selling opportunities. Sanlam expects increasing demand for a global wealth offering from its South African clients, because of the relaxation and potential abolition in due course of exchange controls.

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