HSBC cancels $7.3bn bid to buy Nedbank

2010-10-16 13:29

HSBC Holdings, Europe’s largest bank, has abandoned a bid to buy a $7.3 billion (R50 billion) controlling stake in local lender Nedbank Group after eight weeks of talks.

The London-based bank has been in negotiations to purchase 70% of Nedbank, including a 52% stake owned by Old Mutual, ­Africa’s ­biggest insurer.

HSBC did not say why the talks had broken down in a statement ­released on Friday.

“When you do due diligence and walk away, the only possible interpretation is that you found something that you didn’t like,” said Chris Gilmour, an analyst at Absa Investments.

“Nedbank is now for sale to the highest bidder.”

HSBC said in August it was in talks to buy Nedbank, the country’s fourth-largest lender, to expand in emerging markets and profit from trade flows in Africa.

Since then, HSBC replaced its three top executives, including chief executive Michael ­Geoghegan.

The rand strengthened 7% against the dollar and Nedbank’s shares climbed 5.6%, making the purchase costlier.

The failure wasn’t, “as far as Old Mutual is aware, related to any ­adverse findings during HSBC’s due diligence,” Old Mutual said in a ­statement.

“HSBC remains committed to the South African market and to growing its business in South Africa,” HSBC said in a separate statement.

The breakdown in talks cleared the way for Standard Chartered plc to make an offer for Nedbank, Gilmour said.

Standard Chartered considered making a bid for Nedbank, a person with knowledge of the matter said in May.

The London-based bank said this week that it planned to raise £3.3 billion (R36 billion) in a rights offering.

“This is not a war chest for acquisitions,” said chief executive Peter Sands.

“This is a strategy primarily for organic growth.”

He didn’t rule out “smaller acquisitions”.

HSBC’s UK rival, Barclays, bought a controlling stake in Absa, South Africa’s largest retail bank, for $4.48 billion in 2005.

HSBC, which already has ­operations in Egypt and Nigeria, was advised by Lazard.

Old Mutual was advised by ­Lexicon Partners, Rothschild and Bank of ­America, while Nedbank was advised by Credit Suisse Group. –Bloomberg

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