CBZ Holdings Limited (CBZHL) says it is still engaged in discusssions for a potential acquisition of a complementary business that would see the group increasing regional presence that it presently does not have.
In February last year, CBZ announced the intent to complete the acquisition of a 31,22 percent stake in First Mutual Holdings (FMHL) after an approval of the transaction by shareholders.
The main aim for the transaction was to create an institution that is well calibrated to take any local risk and support operations in the region.
“The company is still engaged in negotiations for a potential acquisition of a complimentary business.
“The acquisition if successfully concluded, may have a material impact of which is currently being determined.
“Accordingly, shareholders are advised to exercise caution when dealing in the company’s shares until a full announcement is made,” said CBZHL in a further cautionary statement released yesterday.
Prior to the transaction, CBZHL held 3,23 percent shareholding in FMHL through a special purpose vehicle, PIM Nominees (Pvt) Limited, and the acquisition of the additional shares from the National Social Security Authority (NSSA), constituting 31,22 percent of the issued ordinary shares of FMHL, takes CBZHL total shareholding to approximately 34,45 percent.
The transaction would be a mixture of cash and equity and the cash will be raised from the group’s assets.
The cash portion is US$21 million and the split in terms of the cash and equity swap is 30/70 percent split.
So far, there are a lot of complementary assets and resources that the group has, therefore, in some areas CBZ might be stronger while in other areas FMHL may be stronger.
It is hoped that this would also give CBZ Holdings an opportunity to increase regional presence which it didn’t have prior to this marriage.
FMHL is the second largest insurance company in the country; therefore the transaction would fit within the group’s insurance business.
This would give the group the scale to compete with large insurance companies as FMHL currently commands about 35 percent of the insurance industry market share.
FMHL has successful business operations in Botswana, Malawi, Mozambique and Zambia.