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'White knight' Wiese rescues ailing Norwich
The Cape tycoon is making winning moves in South Africa's rapidly changing financial services industry, writes MARCIA KLEIN
It is believed Wiese has been buying up Norwich shares and has built up a stake of about 30%. Taking into account his stake, and the 20% held by the Norwich Life Policyholders' Trust, it seems clear Aflife has failed in its bid to gain control. Aflife's bid, which was conditional on a 40% acceptance, closed at noon on Friday. Wiese's involvement points to a possible tie-up between Norwich and Orion, the recently created financial services group formed out of a partnership between Wiese and the Board of Executors. Within Orion is NBS Boland, from which Norwich walked away in the first place. It will be the third deal in the space of a week that seeks to group various financial companies into a consolidated financial services entity. On Tuesday Anglo American and Rand Merchant Bank announced the merger of their financial interests to create a R59-billion financial services giant, set to become the largest group on the JSE. The new company's major interests will include Momentum, Southern Life, First National Bank and Rand Merchant Bank. The following day Liberty Life and Standard Bank Investment Corp, long-time partners through a complex cross-shareholding structure, announced their intention to merge into a group rivalling the new Anglo-RMB venture in terms of size. These mergers, in addition to the pending demutualisation of Old Mutual and Sanlam and their subsequent JSE listing, will see financial services groups dominating the JSE. The mergers will see the creation of five or six financial powerhouses in SA (see graph). Aflife's bid offered one share in Aflife for every four held in Norwich, a premium to the price at the time of the offer. Since then, however, the Norwich share price has risen, indicating some resistance to the offer. There was no comment from Aflife on Friday about the response to the offer. A spokesman said only that "the result will be known some time on the weekend". Although the final tally of acceptances or rejections had not been released at the time of going to press on Friday night, it appears by all accounts that Aflife has lost. This week, however, both Aflife and Norwich must go back to the drawing board. Aflife has indicated it needs to expand into the middle-income area as it offers life assurance mainly to the lower-income market. The plethora of financial services mergers which have already taken place means it will now become difficult to grow through acquisition. While Norwich may have won this round, the Aflife bid exposed some of its weaknesses, including the fact that it does not have a significant majority shareholder. It must clearly work hard and fast to forge a new partnership. Last year, when various deals were being transacted to lead to what eventually became Orion, the multibillion-rand financial services and investment group (one of the powerhouses), Norwich walked away from a possible partnership with NBS, which had a 25% stake in Norwich. Not only did it miss out on the opportunity to become part of the Orion group, but it also laid itself open to a hostile bid. Norwich CE Charles Davies has been criticised for not cementing a deal at the time, and for being slow in courting another partner since. He has been talking to various parties but nothing concrete materialised by the end of January when Aflife made its offer.
The offer aroused unusual interest in the market in that it was hostile. Norwich is significantly larger than Aflife, but Aflife's share and earnings performance has been stronger.
Wiese and Aflife CE Bill Jack could not be reached for comment, and Davies said on Friday he was not in a position to comment at this stage. ý For a detailed analysis of the RMB/Anglo and Liberty/Stanbic mergers, see pages 4 and 5 Top of page
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