JOHANNESBURG (Reuters) -South African insurer Sanlam will buy a 60% stake in MultiChoice’s insurance business for 1.2 billion rand ($66 million) in cash upfront and a potential performance-based earn-out of up to 1.5 billion rand, the groups said on Tuesday.
MultiChoice, Africa’s biggest pay-TV company, said that while its insurance business has demonstrated substantial growth in South Africa, its ambition to expand locally and across Africa “requires a step-up in resources, expertise and technology”.
“Sanlam’s extensive presence and expertise across the African continent, coupled with its track record of success in insurance ventures with non-insurers, positions it strongly for a strategic venture with MultiChoice,” the companies said in a joint statement.
The potential cash earn-out payment is contingent upon the total gross written premium generated by the insurance business for the year ending Dec. 31, 2026, they added.
A pre-acquisition dividend of 59 million rand will also be declared by MultiChoice’s insurance business.
BY 0747 GMT, shares in Sanlam were up nearly 5%, while MultiChoice inched up 0.36%.
MultiChoice will retain a 40% interest in the insurance business and 40% in the broader commercial venture with Sanlam.
The deal gives Sanlam an opportunity to further expand its insurance and financial services business across Africa, the companies said. Opportunities outside South Africa will be facilitated through its SanlamAllianz business.
MultiChoice has a subscriber base of 21 million households across 50 African countries, while Sanlam operates in 31 countries, including eight of the top ten largest African economies.
($1 = 18.2801 rand)
(Reporting by Nqobile Dludla; Editing by Kirsten Donovan and Jan Harvey)
