Iag Snubs $9bn Qbe Merger Plan
The Age
Wednesday May 21, 2008
THE stand-off between QBE and Insurance Australia Group over an $8.7 billion merger plan is set to end, with both sides going their separate ways. IAG last night rejected its rival's latest, slightly increased offer.
After an all-day board meeting in New Zealand yesterday, IAG's directors backed the stance taken by chairman James Strong that QBE's improved terms of 0.145 of its own shares plus 90? in cash for each IAG share was still not enough to persuade IAG to put the deal to its investors. And while IAG did not kill off the bid battle completely, saying it was still prepared to talk about a higher offer, its response is likely to see QBE walk away from its own plan. The global insurer stated on Monday that its new terms were final. There was no immediate response from QBE last night following IAG's defiant statement. However, it had already made clear that no higher bid would be considered if the owner of the NRMA Insurance brand knocked back its latest approach. Because it has yet to make a formal offer to shareholders, QBE is not actually prevented under official takeover rules from increasing its current terms. The IAG board appeared to be betting on that possibility last night when it announced that it was willing engage QBE further with the aim of "securing a fully developed proposal". IAG shares yesterday closed at $4.23, up 3?, but that was before last night's statement. QBE finished 27? up at $25.67, which put a value on each IAG share of $4.62.
© 2008 The Age
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