Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


IAG to buy Wesfarmers NZ, Austr underwriting for A$1.85B

IAG agrees to buy Wesfarmers NZ, Australian underwriting for A$1.85 bln

Dec. 16 (BusinessDesk) – Insurance Australia Group has agreed to buy the New Zealand and Australian underwriting businesses of Wesfarmers for A$1.85 billion, to bolster its position in the two markets.

IAG would acquire Wesfarmers’ WFI and Lumley Insurance brands as well as a 10-year distribution agreement with Coles, it said in a statement today.

The insurer will fund the transaction via a fully-underwritten A$1.2 billion institutional placement, of about 219 million shares at a discounted price of A$5.47 apiece, a non-underwritten share purchase plan capped at A$200 million, the issue of A$300 million of Tier 2 subordinated debt and from existing funds, it said. IAG shares last traded on the ASX at A$5.70. The stock has been halted for the placement.

“Acquiring these businesses supports the group’s strategic priorities of accelerating profitable growth in Australia and sustaining our market-leading position in New Zealand, and we expect attractive EPS accretion,” said IAG managing director Mike Wilkins.

“This is a unique opportunity, which is expected to deliver significant long-term value for IAG shareholders and unlock further growth potential for our businesses in Australia and New Zealand,” he said.

Merging the Wesfarmers businesses with its own is expected to generate net synergies of about A$140 million a year before tax, the company said. Costs of integration would be $120million over two years.

In New Zealand, the Wesfarmers underwriting would be merged with IAG’s existing NZI operations.

The transaction was expected to be completed in the second quarter of 2014. IAG affirmed its 2014 guidance for an insurance margin of between 12.5 percent and 14.5 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>


Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>


Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>


Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>


Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>


Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>


Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>


Get More From Scoop

Computer Power Plus
Search Scoop  
Powered by Vodafone
NZ independent news