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Joint Announcement Regarding The Acquisition By Sanlam Life Of 60% Of Multichoice’s Insurance Business
MULTICHOICE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2018/473845/06)
JSE Share Code: MCG
ISIN: ZAE000265971
("MultiChoice", "MCG" or "the MCG group")
SANLAM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1959/001562/06)
JSE & A2X Share Code: SLM; NSX Share Code: SLA
ISIN: ZAE000070660
("Sanlam")
SANLAM LIFE INSURANCE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/021121/06)
LEI: 378900E10332DF012A23
Bond Issuer Code: BISLI
("Sanlam Life")
JOINT ANNOUNCEMENT REGARDING THE ACQUISITION BY SANLAM LIFE OF 60% OF MULTICHOICE'S
INSURANCE BUSINESS
1. INTRODUCTION
1.1. MultiChoice and Sanlam entered into agreements in terms of which:
1.1.1. Sanlam Life, a wholly-owned subsidiary of Sanlam (the "Purchaser"), will acquire a
60% shareholding in MultiChoice's insurance business, NMS Insurance Services (SA)
Limited ("NMSIS"), from MultiChoice (Pty) Ltd, a South African subsidiary within the
MCG group (the "Seller"), for an upfront cash consideration of R1.2 billion and a
potential performance based cash earn-out, measured at 31 December 2026, of up
to a maximum consideration of R1.5 billion (the "Sale of Shares Agreement"); and
1.1.2. A long-term commercial arrangement has been entered into to expand insurance
and related financial service offerings into MultiChoice's extensive subscriber base
of 21 million households across 50 countries on the African continent (the "Co-
operation and Services Agreement"),
collectively the "Transaction".
1.2. NMSIS, a registered South African composite micro-insurer and authorised financial services
provider, is licensed to underwrite both non-life and life insurance products. It has been
writing insurance for the past 20 years under the DStv brand of MultiChoice focussing on
device, installation, funeral, subscription waiver and debt waiver insurance products.
2. RATIONALE FOR THE TRANSACTION
2.1. MultiChoice Strategic Rationale:
2.1.1. MultiChoice is Africa's leading entertainment platform and has made significant
progress in its strategy to grow into a broader ecosystem of tech-enabled consumer
services. NMSIS, which forms part of MultiChoice's fintech vertical, has
demonstrated substantial growth and profitability in South Africa, but its growth
ambitions to expand its product offering locally and geographic presence across
Africa requires a step-up in resources, expertise and technology.
2.1.2. After careful evaluation of available options, MultiChoice found the opportunity to
collaborate with Sanlam particularly compelling. Sanlam's extensive presence and
expertise across the African continent, coupled with its track record of success in
insurance ventures with non-insurers, positions it strongly for a strategic venture
with MultiChoice and NMSIS.
2.1.3. Through the strategic relationship with Sanlam, MultiChoice gains access to
unparalleled insurance expertise, comprehensive financial services resources and
access to Sanlam's financial services operations across Africa to address MultiChoice
client needs.
2.1.4. Furthermore, the Transaction enables MultiChoice to retain a substantial 40%
interest in NMSIS and 40% in the broader commercial venture with Sanlam, allowing
MultiChoice to continue benefiting from the high-growth potential of this segment
while maximising value for its shareholders.
2.2. Sanlam Strategic Rationale:
2.2.1. Founded in 1918, Sanlam is the largest non-banking financial services group in Africa
and is listed on the JSE Limited ("JSE"), Namibian Stock Exchange and A2X Markets
Limited. Sanlam operates in 31 countries, including eight of the top ten largest
African economies. Sanlam offers a wide range of financial solutions, including life
and general insurance, health, financial planning, retirement, investments, wealth
management and credit to both institutional and retail clients.
2.2.2. The Transaction enables Sanlam, through its Sanlam Fintech cluster, to advance its
strategy of utilizing technology to expand access to financial services across Africa.
This strategic initiative aligns with Sanlam's core purpose of helping Africans achieve
financial confidence.
2.2.3. MultiChoice's extensive subscriber base offers Sanlam, and its affiliates, a unique
platform and attractive opportunity for cross-selling and cost-effective marketing to
an actively engaged subscriber base.
2.2.4. The Transaction provides Sanlam with an opportunity to further scale its insurance
and financial services offering across Africa by leveraging MultiChoice's and Sanlam's
leading market positions. Opportunities outside of South Africa will be facilitated
through SanlamAllianz.
2.2.5. MultiChoice's integrated payments collection platform presents a solid foundation
for offering affordable value-added financial services to drive financial inclusion
sustainably through frictionless bundling of payments for services.
2.2.6. The commercial venture's combined market presence and technology will enhance
growth and market penetration, providing synergies that benefit all stakeholders.
3. TRANSACTION CONSIDERATION
3.1. Under the terms of the Sale of Shares Agreement, MultiChoice will receive:
3.1.1. An upfront cash payment of R1.2 billion for 60% of its interest in NMSIS.
3.1.2. A potential earn-out payment of up to R1.5 billion, in respect of MultiChoice's 60%
interest sold to Sanlam Life, that is contingent upon the total gross written premium
("GWP") generated by NMSIS for the year ending 31 December 2026.
3.2. A pre-acquisition dividend of R59.0 million will be declared by NMSIS of the assets held in
excess of its minimum solvency capital requirement as at its financial year ended
31 March 2024.
4. FINANCIAL INFORMATION
4.1. NMSIS has demonstrated robust growth in recent years, increasing its in-force policies by
19% to 3.3 million for the financial year ended 31 March 2024. Life products, introduced
three years ago as NMSIS diversified beyond device insurance, experienced rapid growth and
account for 30% of in-force policies.
4.2. NMSIS's key financials for the year ended 31 March 2024, audited and prepared in terms of
IFRS, were as follows:
4.2.1. GWP increased 36% year-on-year to R970 million.
4.2.2. Profit after tax increased 51% to R296 million.
4.2.3. The net asset value of NMSIS was R277 million.
5. APPLICATION OF PROCEEDS
5.1. The proceeds received from the Transaction will be utilised within the MultiChoice group for
working capital purposes.
6. EFFECTIVE DATE
6.1. The Transaction will be effective on the last day of the month following the date on which
the last of the suspensive conditions are fulfilled, if such date is before the 25th of the month,
and the last day of the following month if such date falls after the 25th of the month.
7. MATERIAL TERMS AND CONDITIONS PRECEDENT
7.1. The agreements provide for customary warranties, indemnities, events of default, interim
period and other undertakings that are normal for a transaction of this nature, including the
obtaining of necessary regulatory approvals from the South African competition and
regulatory authorities by no later than 31 January 2025 (or such later time as agreed between
the parties).
7.2. The shareholders' agreement between Sanlam and MultiChoice in respect of their
shareholding in NMSIS and the proposed Co-operation and Services Agreement contain exit
mechanisms which are triggered in certain circumstances and exercisable at the discretion of
either MultiChoice or Sanlam, as the case may be ("Exit Mechanisms"). The monetary
amount payable by either Sanlam or MultiChoice pursuant to the Exit Mechanisms is capped.
8. CATEGORISATION OF THE TRANSACTION
8.1. The Transaction, including the Exit Mechanisms, are deemed to be Category 2 transactions
for both Sanlam and MultiChoice in terms of the JSE Listings Requirements. Accordingly,
neither Sanlam nor MultiChoice requires shareholder approval.
8.2. Given that NMSIS will become a subsidiary of Sanlam, the provisions of NMSIS'
memorandum of incorporation and shareholders' agreement will not frustrate Sanlam in any
way from compliance with their obligations in terms of the JSE Listings Requirements.
Randburg
18 June 2024
MultiChoice Enquiries:
MultiChoice Investor Relations
Email: investorrelations@multichoice.com
JSE Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
Financial Advisor to MultiChoice
Marsden Advisory (Pty) Ltd
Legal Advisor to MultiChoice
Webber Wentzel
Sanlam Enquiries:
Sanlam Investor Relations
Email: ir@sanlam.co.za
JSE Equity Sponsor to Sanlam Ltd
The Standard Bank of South Africa Limited
JSE Debt Sponsor to Sanlam Life Insurance Limited
Rand Merchant Bank (a division of FirstRand Bank Limited)
Legal Advisor to Sanlam
ENSafrica
Important notice
Shareholders should take note that, pursuant to a provision of the MultiChoice memorandum of
incorporation, MultiChoice is permitted to reduce the voting rights of shares in MultiChoice (including
MultiChoice shares deposited in terms of the American Depositary Share ("ADS") facility) so that the
aggregate voting power of MultiChoice shares that are presumptively owned or held by foreigners to
South Africa (as envisaged in the MultiChoice memorandum of incorporation) will not exceed 20% of
the total voting power in MultiChoice. This is to ensure compliance with certain statutory
requirements applicable to South Africa. For this purpose, MultiChoice will presume in particular that:
• all MultiChoice shares deposited in terms of the MultiChoice ADS facility are owned or held by
foreigners to South Africa, regardless of the actual nationality of the MultiChoice ADS holder; and
• all shareholders with an address outside of South Africa on the register of MultiChoice will be
deemed to be foreigners to South Africa, irrespective of their actual nationality or domicilium,
unless such shareholder can provide proof, to the satisfaction of the MultiChoice board, that it
should not be deemed to be a foreigner to South Africa, as envisaged in article 40.1.3 of the
MultiChoice memorandum of incorporation.
Shareholders are referred to the provisions of the MultiChoice memorandum of incorporation
available at www.MultiChoice.com for further detail. If shareholders are in any doubt as to what action
to take, they should seek advice from their broker, attorney or other professional adviser.
Shareholders are further referred to the ruling issued by the Takeover Regulation Panel on 27 February
2024, which deals with the MultiChoice memorandum of incorporation. The ruling can be accessed on
MultiChoice's website at https://www.investors.multichoice.com/regulatory.php.
If shareholders are in any doubt as to what action to take, they should seek advice from their broker,
attorney or other professional adviser.
Date: 18-06-2024 08:00:00
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