Globe/British American merger still subject to due diligence

By David Lindsay

Globe Financial Management yesterday clarified the position of its proposed merger with the Maltese operations of British American Insurance (Mauritius), explaining that the merger is still subject to the satisfactory completion of the due diligence exercises currently underway on the part of both parties.

In addition, GFM explained that the merger is also dependent on obtaining the necessary regulatory and shareholder approvals.

The conclusion of the due diligence exercise, which was previously expected by mid-December, is now being anticipated for the end of January.

GFM had announced its plans to merge with the local operations of British American Insurance back in November. The agreement would see GFM taking over the gauntlet of British American’s local operations in return for an allocation of shares in GFM. As a result, the share transfer is expected to effectively make British American a significant shareholder in GFM.

As part of the merger deal, British American will transfer its life insurance business, its majority shareholding in BUPA Malta and its 50 per cent stake in Britam Limited – a property holding company - to GFM.

Both companies are listed on stock exchanges, GFM on the Malta Stock Exchange and British American on the Mauritius Stock Exchange.

The merger is interesting in that it will be uniting two companies acting in the financial services field, although they operate in different sectors. It is expected that the joining of their operations will see synergies capitalised upon, while opening up a capacity for a wider range of services and growth prospects in both existing and future activities.

Globe chairman, Christopher Pace, speaking on the impending merger of the two operations, emphasised it would if approved widen the client base of both operations, while also increasing their market potential to the benefit of both the clients and the shareholders. Mr Pace will remain as chairman of the merged operation.

The merger is expected to be finalised during the first half of this year.

Mr Pace is enthusiastic about the development, as he explained in November, "This is a very significant and exciting move, which we are confident will prove beneficial to both companies and, ultimately, to our shareholders. Through this merger, we will be able to diversify our operations and create new revenue streams.

"As a merged operation, we shall be able to tap into the significant synergies that both parties will bring to the larger set-up. There will also be economies of scale."

Equally optimistic is Dawood Rawat, chairman of British American Holdings, who was recently in Malta to finalise the merger agreement. He comments, "Our alliance with Globe Financial Management plc is potentially exciting. There will be opportunities for growth in Malta and the region. Globe Financial Management is an ideal partner for us, as its business complements our own, and both parties have much to offer in financial services and healthcare."

The British American group has offices in London, Washington, the Bahamas, Kenya, Mauritius and India, besides Malta. The Malta office currently operates as a branch of British American Mauritius. Before the merger, it will be set up as an autonomous company, registered in Malta. After that, its business and that of BUPA Agencies Ltd, which is at present a subsidiary of British American Mauritius, will merge with Globe Financial Management plc.

British American’s Malta office sells life and health insurance. BUPA Agencies is the Malta agent for BUPA International, the UK-based health insurer. These businesses have a joint complement of 37 employees.

British American has been operating a branch in Malta since 1965 and has built up a portfolio of life and related insurance cover for its Maltese clientele.

In 1997 it secured a majority shareholding in BUPA agencies Malta and the merger will encompass all these aspects of British American’s business. British American also holds a 50 per cent stake in Britam Limited, a property owning company set up earlier this year.