Old Mutual offers $248 million for M&F stake

By Phakamisa Ndzamela

JOHANNESBURG (Reuters) - Insurer Old Mutual offered to pay 1.81 billion rand in new shares for the 26.5 percent of South African financial services company Mutual & Federal it does not already own.

Old Mutual, which owns about 73.5 percent of M&F, said on Wednesday it wanted to buy out M&F investors at 21.25 rand per share, a 19.7 percent premium to Tuesday's closing price.

The deal would unlock capital synergies and leverage additional capacilities across Old Mutual's African operations, the company said. As part of the offer, M&F management, staff and various black investors would receive Old Mutual shares.

"We have identified specific business development opportunities and our increased ownership will enhance our ability to improve M&F's operational performance," Old Mutual chief executive Julian Roberts said. "It also removes any remaining uncertainty about the future of the business."

South Africa's largest insurer said it had received irrevocable undertakings to vote in favour of the deal from M&F shareholders who held about 22.5 percent of the shares it wants to acquire.

Abri Du Plessis, an analyst at Gryphon Asset Management, said he did not expect dissenting views from shareholders.

"Shareholders should be happy. I think it's a good time to do it. I think (Old Mutual) won't be able to afford it later. A year from now they will smile on it," Du Plessis said.

Shares in Old Mutual, which has businesses in South Africa, the United States, Europe and Scandinavia, were up 2 percent to 13.26 rand at 1032 GMT, while M&F was 18.0 percent higher at 20.95 rand.