Suncorp and Promina agree to deal

Australian company Suncorp has reached agreement to buy Promina, which owns Asteron, Guardian Trust, Vero and Tyndall in New Zealand. Also, David Chaplin provides details on Suncorp - a company largely unknown in New Zealand.

Tuesday, October 24th 2006, 5:57AM

Promina looks likely to be taken over by Brisbane-based Suncorp-Metway in a deal which is valued at around A$7.9 billion.

Promina is a dual listed company which operates Asteron, Vero, Tyndall and Guardian Trust in New Zealand.

Under a merger implementation agreement announced yesterday Suncorp will acquire all of Promina’s ordinary shares for approximately A$7.9 billion.

The boards of both companies have unanimously agreed to enter into the agreement.

“The transaction will provide enormous benefits, particularly for customers of both companies who will have access to an even greater range of products and services specific to their individual needs, and delivered through a range of brands that are well known and respected in their individual markets,” Suncorp chairman John Story says.

The scheme of arrangement underlying the deal is subject to approval by Promina shareholders due to be held in February.

The combined group will create a $22.7 billion diversified financial services company. It will be Australia’s 10th largest ASX-100 company – with an expanded reach in Australian and New Zealand insurance markets, an increased presence in wealth management and a successful banking franchise.

Who is Suncorp?
To many New Zealanders Suncorp is just the name of a stadium in Brisbane which hosts rugby and league matches. ASSET editor David Chaplin provides a backgrounder on the company which is wanting to take over Promina.

The Queensland-based financial services group Suncorp is one of those ‘mid-tier’ institutions which has been searching for scale almost since it came into being in 1999.

Suncorp-Metway formed after two Queensland government-owned entities - the mixed financial services firm Suncorp and the agricultural and commercial lender QIDC - merged with the listed Metway Bank.

After the merger the group began looking for acquisitions and made its most significant outlay in 2001 when buying AMP’s general insurance business GIO.

Today Suncorp claims to be Australia’s sixth largest bank and its fourth largest general insurance group but has it also attempted to build up its investment, superannuation and wealth management businesses.

Headed by former Commonwealth Bank executive, John Mulcahy, Suncorp has secured a firm niche in its home state of Queensland as well as national presence through the GIO brand.

Despite a run of decent performances and reaching a market value of over A$11 billion, Suncorp has always been considered a takeover target. After taking as head of Suncorp in 2003, Mulcahy (who was at one time tipped to secure the top job at Commonwealth Bank) said the group was vulnerable to a takeover bid.

Westpac was rumoured to be the likely bidder for Suncorp and it may yet make a play for the Queensland group even as Mulcahy spearheads the A$8 billion takeover for Promina.

« New asset allocation from Morningstar

Sovereign takes regulation bull by the horns »

Special Offers