ASB takes the softly, softly approach with Sovereign
One of the most intriguing plays in the financial services industry rationalisation game is ASB Bank's successful $235 million takeover of Sovereign.
The move is curious because it is a bank taking over an insurance company. Up until this transaction the merger and acquisition game was being played by like-minded companies. That is insurance companies buying insurance companies. It's also interesting as Sovereign was shopped around to all potential buyers, yet in the end there was only one company wanting the business - ASB Bank. Other transactions, such as the sale of Norwich Union's insurance and funds management business, and the upcoming sale of BT Funds Management, all feature aggressive bidding once the for sale sign goes up.
ASB Bank managing director Ralph Norris says the bid was not a rescue bid, rather Sovereign is a good fit for ASB and it gives the bank a platform to become a broader based financial services company. Also giving strength to ASB's case was the early support shown for the bid by Sovereign's two founding shareholders, Chris Coon and Ian Hendry.
Another of the other interesting aspects about the deal is that it isn't the normal old, wham-bam-thank-you-mam sort of takeover.
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