Globe/British American complete due diligence

- MFSC, MSE and shareholder approval to now be sought

By David Lindsay

Globe Financial Management has announced that its proposed merger with British American Insurance is to go ahead as planned, following the satisfactory completion of the companies’ respective due diligence exercises. Globe added that both parties were satisfied with the results and that both parties have agreed to proceed.

The merger process will now embark on its next step, that of approaching the Malta Financial Services Centre and the Malta Stock Exchange – as Globe is listed on the Malta Stock Exchange - with a view to attaining the necessary regulatory approval for the merger.

Globe is also expected to convene an extraordinary general meeting with its shareholders over the first quarter of this year, with the aim of seeking Globe shareholder approval for the merger.

As a result of the merger, British American will be allotted ordinary shares in Globe Financial Management. However, it is estimated the it will eventually hold an amount of shares representing not less than 47 per cent and not exceeding 49.9 per cent of Globe’s issued ordinary share capital.

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.

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

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.