The Competition Commission has approved Sanlam’s R6.5bn bid to acquire smaller rival Assupol, but stipulated a moratorium on retrenchments for three years as a condition.
First announced in February, the deal will see SA’s largest nonbanking financial services group acquire Assupol through its wholly owned subsidiary, Sanlam Life Insurance.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,” the commission said in a statement on Wednesday.
It said that to address employment concerns, the merged entity would not retrench employees for three years after the merger implementation date.
The Competition Tribunal, which acts like a court on competition and merger matters, still needs to approve the transaction, which would be implemented through a scheme of arrangement.
With a market cap of about R172bn on the JSE, Sanlam operates throughout Africa, India, Malaysia and several other countries providing financial solutions such as life and general insurance, financial planning, retirement, investments and wealth management to institutional clients and consumers across all market segments.
Since Paul Hanratty assumed leadership as group CEO in 2020, Sanlam has been aggressively expanding through acquisitions to strengthen its insurance division.
Assupol, which began in 1913 as a burial society, is the holding company of the Assupol group of companies that operates through two wholly owned subsidiaries: Assupol Life and Assupol Investment.
Assupol Life offers funeral cover, life cover, pre-and post-retirement and savings products to individual clients and funeral cover to group schemes in SA. As of June 2023, it generated gross insurance premium revenue exceeding R5bn.
The merger has been touted as a strategic move that will further strengthen the two companies’ position in the market and enhance their ability to provide comprehensive insurance solutions.
The proposed deal was set in motion after long-time Assupol shareholders Bidvest, which holds 46.02% of Assupol’s securities, as well as the International Finance Corporation (IFC), holding 19.41% of Assupol, announced they intended to dispose of their respective shareholdings.
The Assupol board of directors decided on Sanlam as a potential buyer after considerable deliberation and assessment of the potential advantages for all stakeholders, the company said.
Assupol is listed on the Cape Town Stock Exchange. Following the merger, Assupol intends to continue trading under its own brand.
In July, Business Day reported that niche private banking and wealth management group Investec was in line for a R1.7bn cash injection from the proposed acquisition, as it owns a stake in Assupol through one of its subsidiaries.
Sanlam’s share price was up 1.17% to R81.35 at 2pm on Wednesday.