Barclays’ improved offer of GBP2.9 billion, which is equal to 32.8 billion rand or $5.4 billion, represents a 36% premium over Absa’s share price when negotiations first started, and a premium of 8.5% over the last share price before disclosing the new deal.
The revised offer has received the backing of the entire Absa board and the South African Minister of Finance has approved the deal. The offer has also been endorsed by Batho Bonke, Absa’s empowerment partner, and Barclays has written expressions of support for the acquisition from shareholders representing 63% of Absa’s ordinary shares.
Barclays’, which had been the biggest bank in South Africa before it was forced out in the 1980s, will have immediate access to seven million new customers if the purchase is completed. The UK bank plans to use the tie up with Absa to launch its credit card, investment banking and asset management businesses into South Africa, which it hopes will boost its African contribution to total income from a fifth to a third.
