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BANKING giant FirstRand is to sell its stake in unlisted insurance firm Momentum to another South African insurer, Metropolitan, as it aims to focus on its mainstay lending business.
FirstRand did not disclose the value of the sale. Under the terms of the deal, the bank will sell all of its stake in Momentum to Metropolitan, which will later issue new shares to FirstRand.
Following the transaction, FirstRand said it would offer its stake in the merged entity to its own shareholders.
FirstRand, South Africa's third-largest bank, said it expected its shareholders would hold around 60percent of the merged firm, with Metropolitan shareholders holding the remaining stake.
The merger exchange ratio was determined by the embedded values of Metropolitan and Momentum, FirstRand said.
As at December 31 2009, Momentum and Metropolitan published embedded values of R17,8million and R12million, respectively.
FirstRand said the deal would allow it to focus on its core banking businesses.
Shares of Metropolitan both jumped on the news, rising more than 6percent on the Johannesburg Stock Exchange. - Reuters