Nedcor/Didata
Old Mutual PLC
20 September 2000
Old Mutual plc
Old Mutual's banking subsidiary Nedcor
reaches exchange agreement with Dimension Data Holdings
Nedcor Ltd ('Nedcor'), which is 53%-owned by Old Mutual
plc ('Old Mutual'), has concluded binding agreements with
Dimension Data Holdings Plc ('Dimension Data') regarding
the exchange by Nedcor of its 25.1% shareholding in
Dimension Data International Ltd ('DDIL') for a direct
shareholding in Dimension Data valued at £715 million and
cash equivalent to about £180 million.
The transaction valued at R9 billion will yield a gain of
R5.9 billion. In exchange for its entire shareholding in
DDIL, together with all shareholders claims, Nedcor will
receive:
* the allotment and issue to Nedcor of 103,134,329
ordinary shares in Dimension Data, registered
on the company's principal share register in London;
* a cash payment by Dimension Data of R900 million,
payable in South Africa; and
* a cash payment by Dimension Data of approximately
US$124 million, payable in the European Union.
The parties will synchronise the due dates for the local
payment and the settlement of the capital portion of the
option price of R854 million, payable by Nedcor pursuant
to the exercise of the option granted to it by Dimension
Data to restore its shareholding in DDIL from 20.1% to
25.1%.
Nedcor has also agreed to settle certain Rand denominated
obligations totalling R16 million, which arose as a
consequence of Nedcor's participation in the acquisition
by Dimension Data of the European networking assets of
Comparex Holdings Limited, together with R80 million
funding costs of the option. In addition Nedcor will
settle US Dollar denominated obligations totalling US$59
million, which were incurred, inter alia, to fund recent
acquisitions by DDIL in the United States of America.
The exchange is subject to the following conditions:
* all requisite approvals being obtained from the South
African Reserve Bank;
* the approval of the transaction by the competition
authorities in the United Kingdom;
* the approval of the transaction by an extraordinary
general meeting of shareholders of Dimension Data,
in accordance with the related party transaction
requirements of the UK Listing Authority ('the
UKLA') and the Johannesburg Stock Exchange ('the
JSE');
* the UKLA, the London Stock Exchange plc, and the
JSE agreeing to list the consideration shares; and
* the receipt by Dimension Data of written
confirmations from its independent professional
advisors, Merrill Lynch International and Deutsche
Bank, that the exchange is fair and reasonable to
the shareholders of Dimension Data.
After the transaction is completed Nedcor will own
approximately 8.2% of the enlarged share capital of
Dimension Data. Old Mutual and its consolidated
subsidiaries own 100 306 180 million shares in Dimension
Data as at close of business 18 September 2000,
representing approximately 8.66 % of the current share
capital of Dimension Data. Dimension Data listed its
shares on the London Stock Exchange in July 2000.
Continuing strategic relationship
Nedcor intends to maintain a strategic relationship with
Dimension Data and after the implementation of the
exchange, will be one of the single largest beneficial
shareholders in Dimension Data. Old Mutual, together with
Nedcor, has also taken investment stakes in The Internet
Solution (Proprietary) Limited, Miraculum (Proprietary)
Limited and Omnilink (Proprietary) Limited the vehicle
which owns and operates the leading virtual private
network supplier in South Africa. These investments also
underpin Nedcor's future relationship with Dimension
Data. In terms of the agreements, Nedcor has bound
itself to hold at least 80% of the consideration shares
until 31 March 2001.
Application of net cash proceeds
Pursuant to the exchange, Nedcor will receive net cash
proceeds of US$65 million offshore. These funds will,
together with Nedcor's other offshore cash resources, be
used by Nedcor to fund strategic offshore investment
initiatives.
Financial effects of the transactions
In Nedcor's audited accounts for the year ended 31
December 1999, the net assets and profit before tax
attributable to the interests being exchanged were R939
million and R41.7 million respectively.
The estimated pro-forma financial effects of the
transactions on the earnings and net asset value
attributable to Nedcor shareholders are set out in the
table below and are based on the following assumptions:
* the financial effects are calculated for one Nedcor
ordinary share;
* the Comparex acquisition was effective for the full
6 months ended 30 June 2000 and was funded through
the dilution of Nedcor's shareholding in DDIL to
25,1% and by a cash payment of R940 million on 1
January 2000;
* the option was exercised, and the option price of
R854 million plus funding costs of R80 million was
paid,on 1 January 2000;
* the exchange was effective on 1 January 2000;
* a Rand/US$ exchange rate of 7.261 applied to the
offshore payment;
* Rand denominated cash balances attract interest at
an after tax rate of 6.65% NACM; and
* US$ denominated cash balances attract interest at an
after tax rate of 5.0% NACM.
Actual 6 Pro-forma 6
months months %
to 30 June 2000 to 30 June 2000 change
Headline earnings
per
ordinary share 517 cents 519 cents + 0.4
Net asset value
per ordinary
share
(at book value) 4666 cents 4668 cents + 0.04
Net asset value
per ordinary
share
(at market
value)** 6484 cents** 7205 cents* + 11.1
** Adjusted for directors' valuation of technology
investments at 30 June 2000
* Based on the R69.60 closing price of Dimension Data
shares on the JSE on 18 September 2000.
Further cautionary announcement
It is anticipated that a further announcement concerning
the conditions precedent will be made subsequent to the
extraordinary general meeting of Dimension Data
shareholders which is due to be held in latter part of
October 2000. Shareholders are therefore advised to
exercise caution in dealing in Old Mutual or Nedcor
shares until such further announcements are made.
20 September 2000
ENQUIRIES:
Old Mutual plc, London Tel: + 44 20 7569 0100
James Poole, Director Investor Relations
College Hill, London Tel: + 44 20 7457 2020
Nicholas Williams
Old Mutual, Cape Town Tel: + 27 21 509 2732
Bruce Allen, Manager, Group Media Communications
College Hill, Johannesburg Tel: + 27 11 447 3030
Kim Milnes