JSE-listed pension fund administrator postpones buy-back in Mercer Africa due to the market uncertainties. . Photo: Simphiwe Mbokazi/African News Agency (ANA)
JSE-listed pension fund administrator postpones buy-back in Mercer Africa due to the market uncertainties. . Photo: Simphiwe Mbokazi/African News Agency (ANA)

Alexander Forbes calls halt to R1bn deal

By Dineo Faku Time of article published Mar 24, 2020

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JOHANNESBURG - Alexander Forbes, the JSE-listed pension fund administrator, yesterday postponed the R1billion share buyback in Mercer Africa due to the market uncertainties caused by the coronavirus (Covid-19).

The group said that it agreed with Mercer Africa to consider a possible repurchase of the shares at a later date, as South Africa’s confirmed cases of coronavirus reached 402. There have been 12944 coronavirus-related deaths worldwide.

“As a result of the global economic turmoil caused by the Covid-19 pandemic, there has been a material change in market conditions and outlook and it is impossible to determine for how long this uncertainty will persist. Alexander Forbes and Mercer have consequently mutually agreed not to proceed with the Specific Repurchase at present,” said the company.

In January Alexander Forbes announced it would repurchase more than 200million shares in Mercer Africa for R1.034billion at R5.15 a share. Mercer Africa provides advice that helps customers build healthier futures. The group said the decision not to proceed with the repurchase would further strengthen its capital and liquidity position and ensure its robust sustainability through the difficult economic conditions expected over the forthcoming months.

The company also said that as a result of the pandemic and the restrictions placed on public gatherings, its annual general meeting scheduled for later this month would not only be accessed through the internet.

Asief Mohamed, the chief investment officer at Cape Town-based Aeon Investment Management, said that the shares buyback was subject to shareholder approval.

“The Alexander Forbes share price is trading at close to R3.00 and therefore reduced the likelihood of non-related shareholders voting in favour of the buyout at a R5.15 price per share. It was, therefore, prudent to withdraw the relevant shareholder resolutions,” said Mohamed.

Mercer Africa, said in January that it planned to dispose of its entire investment of 442.8million shares in Alexander Forbes.

Billionaire Patrice Motsepe’s investment holding company African Rainbow Capital (ARC) said that it would take over Mercer Africa’s stake by repositioning itself as the key strategic shareholder.

ARC said in January that it would increase its stake in Alexander Forbes by acquiring more than R1bn worth of shares and would acquire 193million shares from Mercer Africa at R5.25 a share for R1.01bn, making it the biggest shareholder in the group.

Alexander Forbes shares declined 3.05ercent on the JSE yesterday to close at R3.50.

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