London-based Old Mutual PLC announced the end of discussions with HSBC Holdings PLC over the sale of a stake in the company's South Africa-based Nedbank Group Ltd.
Old Mutual said in a statement that HSBC will not proceed with a partial offer for Nedbank as the agreed exclusivity period expired. No reasons were disclosed on why HSBC backed out from the offer.
Old Mutual owns a 51.5% stake in Nedbank Group and said that it would evaluate its options for the subsidiary after the offer failed to materialize.
HSBC and Old Mutual entered into exclusive negotiations in August in what was anticipated as a deal to acquire as much as 70% shares in Nedbank as the company wanted to increase its footprint in Africa. People familiar with the negotiations estimated the total deal value to be around $7 billion. Standard Chartered PLC had also shown an interest in Nedbank, but backed out after finding the price tag to be too high.
There are speculations in the market that Old Mutual would cut the stake price to lure Standard Chartered into negotiations but there are little chances of that happening. Standard Chartered, which though based in the U.K, carries out most operations in Asia, announced a GBP3.26 billion rights issue this week which its chief executive said would not be used in acquisitions.
The news caused a little dip in Old Mutual's shares as they lost 9 pence, or 6.4%, to trade at 136 pence; Nedbank shares were down 8.8% at 133.90 rand, which is greater than the overall slump in the Johannesburg market.
