Sanlam to acquire controlling interest in AfroCentric

 ·11 Oct 2022

Financial services group Sanlam says it has submitted an offer letter to the board of AfroCentric Investment, expressing its firm intention to acquire a controlling shareholding in the majority black-owned JSE-listed investment holding company.

Sanlam, through Sanlam Life Insurance, currently holds 28.7% in ACT Healthcare Assets, which in turn holds AfroCentric’s businesses, including the Medscheme medical scheme administration business and AfroCentric’s pharmacy businesses. As part of the transaction, Sanlam will transfer its shareholding in ACT Healthcare Assets to AfroCentric in exchange for an equal (28.7%) shareholding in AfroCentric.

Should the transaction proceed, Sanlam said it will hold a majority of AfroCentric shares, with the final shareholding dependent on the percentage of AfroCentric shareholders that accept Sanlam’s offer.

The insurance specialist has offered a purchase consideration of R6.00 per AfroCentric share, and AfroCentric shareholders have the option to receive the purchase consideration in cash or in Sanlam shares.

Rationale for the transaction

Sanlam said it intends to expand its client proposition to provide a more holistic product offering, including medical aid and health insurance. “Through this transaction, Sanlam will be able to integrate AfroCentric’s product offering into its ecosystem, while AfroCentric will gain increased access to the wide Sanlam distribution network. AfroCentric’s client base will also benefit from access to the overall Sanlam product offering and vice versa,” it said.

“AfroCentric is focused on delivering affordable medical aid and health insurance products which complements Sanlam’s purpose of enabling its clients to be financially secure and prosperous.”

In the long term, Sanlam said it will develop bespoke healthcare solutions and enhance commercial visibility through increased marketing and co-branding at the administrator level.

Sanlam Group CEO, Paul Hanratty, said: “Sanlam is delighted to welcome AfroCentric shareholders, management and key stakeholders into the Sanlam Group if this offer to shareholders is accepted. AfroCentric is a leading diversified and integrated healthcare provider that provides services to 3.8 milion members.

“They have an unwavering focus on providing excellent service at affordable price points to South African consumers, which makes them an attractive addition to Sanlam’s stable of offerings.”

The offer is subject to conditions customary to a transaction of this nature, including approvals from the Competition Tribunal and Takeover Regulation Panel.

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