Sanlam has agreed to acquire the remaining 37.3% of Santam for R505 a share, a transaction that would give South Africa’s largest financial services group full ownership of the insurer and end its separate JSE listing.

The Sanlam Santam acquisition, announced on Monday, October 5, would see Sanlam Life, Sanlam’s wholly owned subsidiary, buy the Santam shares it does not already own through a scheme of arrangement.

Sanlam already holds an effective 62.7% stake in Santam, according to the companies’ joint announcement. The proposed transaction would therefore consolidate the entire insurer under Sanlam’s ownership.

The R505 cash offer represents a 26.6% premium to Santam’s closing share price on Oct. 2, as well as premiums of 25% and 28.6% to its 30-day and 90-day volume-weighted average prices, respectively.

If completed, Santam would be delisted from the Johannesburg Stock Exchange and Sanlam would apply for the removal of Santam’s listings from the Namibian Stock Exchange and A2X Markets.

The transaction remains subject to the required shareholder and regulatory approvals, including approvals from South Africa’s Financial Surveillance Department, the Takeover Regulation Panel, the Prudential Authority and the JSE.

Sanlam said the proposed acquisition would simplify the group’s structure and remove constraints associated with Santam remaining a separately listed company.

The company said full ownership would give the enlarged group greater strategic and capital flexibility while allowing it to capture the economic interest currently held by Santam’s minority shareholders.

“The proposed transaction represents a natural next step in this relationship by fully consolidating Sanlam’s ownership of Santam,” Sanlam and Santam said in their announcement.

The companies said their commercial relationship stretches back more than a century and has evolved into a close partnership in South Africa’s insurance market.

Sanlam also said the enlarged group would be better positioned to combine its expertise and pursue growth opportunities in emerging markets.

The proposed structure would eliminate the need for Santam to maintain a separate listed-company structure while allowing Sanlam to exercise direct ownership over its general insurance business.

The Sanlam Santam acquisition has its roots in the formation of both businesses in Cape Town in 1918.

Santam was registered in March 1918 as a short-term insurer and trust company. Sanlam was established several months later to handle long-term life assurance operations. At the time, Santam was the parent company and held the majority of Sanlam’s shares.

The ownership structure changed as Sanlam’s life insurance operations expanded. In 1954, Sanlam acquired a majority stake in Santam, reversing the earlier relationship between the two companies.

The businesses later developed into separate operational pillars within the broader group. When Sanlam and Santam were listed on the JSE, Sanlam became the overarching holding company while Santam remained separately listed.

Sanlam retained a controlling stake in Santam, leaving minority investors with shares that continued to trade publicly.

The proposed transaction would now bring the two businesses under full common ownership more than a century after their establishment.

The offer is substantially above Santam’s recent trading levels. The companies said the consideration represents a 26.6% premium to the Oct. 2 closing price and a 28.6% premium to the 90-day volume-weighted average price.

Santam’s independent board has unanimously backed the transaction and is expected to recommend that eligible shareholders vote in favour of the scheme, according to Moneyweb.

The transaction is structured as a scheme of arrangement. If the required conditions are satisfied, Sanlam Life will acquire the eligible Santam shares and Santam will automatically be delisted from the JSE.

The delisting would end Santam’s more than six-decade history as a separately listed company. Santam was listed on the JSE in 1964, according to reporting by Newsday.

The proposed deal must pass through the regulatory and shareholder approval process before it can be implemented.

The scheme requires the fulfilment or waiver of conditions set out in the implementation agreement, including the necessary approvals from the relevant South African authorities and the JSE.

If those conditions are met, Sanlam will become the sole owner of Santam and the insurer will cease to trade as a separately listed company.

The transaction would reduce the number of major insurance companies separately represented on South Africa’s public equity market while further consolidating Sanlam’s insurance operations.

The deal represents a significant change in the ownership structure of two companies whose corporate histories have been intertwined since 1918, while placing Santam’s future as an independent listed company in doubt.