Big South African insurer gets go-ahead for R6.5 billion deal

The Competition Commission has given Sanlam the green light to acquire Assupol in a deal that will cost the life insurer an estimated R6.5 billion.

The commission announced today that, following its ordinary meeting on Wednesday, 7 August 2024, it has recommended that the Competition Tribunal approve the proposed transaction whereby Sanlam Life intends to acquire Assupol, with conditions.

The primary acquiring firm, Sanlam Life, is wholly owned and controlled by Sanlam Limited, a public company listed on the JSE, A2X and the Namibia Stock Exchange. 

Sanlam is not controlled by any firm or shareholder, and its share capital is widely held. Sanlam and Sanlam Life hold interests – directly or indirectly – in several firms in South Africa. 

Sanlam is a pan-African financial services group that provides financial solutions to institutional clients and consumers across all market segments. 

Its areas of expertise include life and general insurance, financial planning, retirement, investments, and wealth management. The insurer operates across the African continent, India, Malaysia and various other countries.

The primary target firm is Assupol, a 110-year-old South African insurance company listed on the Cape Town Stock Exchange.

Assupol is the holding company of the Assupol group of companies. It operates through two wholly owned subsidiaries, Assupol Life and Assupol Investment Holdings.

Assupol Life is a registered life insurer and authorised financial services provider that offers the following products: funeral cover, life cover, pre-and post-retirement products savings products to individual clients and funeral cover to group schemes in South Africa. 

Assupol Investment is the investment holding company that houses the Assupol Group’s strategic investments.

The Competition Commission said it is unlikely that the proposed transaction will substantially lessen or prevent competition in any market.

“To address employment concerns, the merged entity shall not retrench employees as a result of the merger for a period of three years following the merger implementation date,” the commission said.

Below is an overview of Assupol’s structure:

The commission’s decision follows Sanlam’s announcement in February this year that it plans to acquire 100% of Assupol Holdings for R6.5 billion.

Through its subsidiary, Sanlam Life Insurance, Sanlam intends to acquire 100% shareholding in Assupol.

This follows the announcement last year that Budvest, which holds 46.02% of Assupol’s securities, and the International Finance Corporation (IFC), which holds 19.41% of Assupol, intend to dispose of their respective shareholdings. 

Both have been shareholders in Assupol for 10 years.

Budvest and the IFC have irrevocably committed to voting in favour of all the resolutions required to implement the Scheme of Arrangement.

The decision on the new potential investor was made after careful consideration and extensive evaluation by the Assupol board of directors of the potential benefits for all parties involved. 

Assupol chairman Dr Reuel Khoza said, “This acquisition by Sanlam will not only strengthen Assupol’s position in the market but also enhance our ability to continue providing exceptional value to our clients.” 

“We are excited about this new chapter and look forward to the benefits it will bring to both our employees and clients.”

This move will further strengthen the two companies’ position in the market and enhance their ability to provide comprehensive insurance solutions to their respective clients.