Londiwe Buthelezi
The time frames initially set for the Absa deal to acquire the bulk of the African operations of its parent company, Barclays, no longer applied, Absa said.
The banking group had estimated last December that it would have fulfilled the conditions of the deal on or around March 29 and that April 12 would be the last day it traded under “Absa Group Limited”.
On Friday, the group said that while good progress had been made, the indicative corporate actions timetable was no longer applicable.
However, the bank still expected that the transaction would be completed within the dates allowed for under the sale and purchase agreement between Absa and Barclays Africa Group.
Absa said the transaction remained subject to various conditions precedent, including various regulatory approvals.
In the abolished timetable, it was said that if regulatory approvals across more than 10 jurisdictions were not obtained by June 6, either of the parties could terminate the deal.
Jean Pierre Verster, an analyst at 36One Asset Management, said in a complex transaction like this one in which multiple jurisdictions were involved, it was common for deals not to progress at the initially anticipated time frame.
“When regulatory approval has to be sought from different regulators in multiple jurisdictions, it necessarily takes a long time. In this case it’s even longer than what Absa had anticipated,” Verster said.
Stephen Meintjes, the head of research at Imara, said there was nothing stopping Absa from continuing with most of the other processes of acquiring Barclays’ African operations because there was a high likelihood that the deal would proceed as it had support from shareholders.
Absa shareholders approved an R18.3 billion all-share offer for most of Barclays’ African assets. The offer would increase Barclays’ stake in Absa to 62.3 percent from 55.5 percent.
Absa had also indicated in the same circular posted to shareholders on December 14 that the Absa Group would be renamed Barclays Africa Group.
Meintjes said Absa would have to elaborate on whether the rebranding would only affect the listed entity or the whole group.
It would make a difference whether Absa rebranded its entire image or only the listed entity because this would affect the bank’s recognition in South Africa.
Verster said Absa would only rebrand the listed entity, and thus its recognition by South African consumers would not be affected.
“They’ve put so much money in the Absa brand in South Africa. They are not going to change it to Barclays anytime soon,” he speculated.
Dimitri Mitropapas, a stock broker at PSG Konsult, said that whichever scenario turned out to be the case, Absa’s share price had not reacted negatively to the announcement.
He added that expanding elsewhere in Africa was a strategy Absa should follow and the one that would separate the bank from the rest since it was not very innovative.
Absa shares fell by 1.26 percent to close at R148.21 on the JSE on Friday.