QBE Insurance Group (QBE) News Update

Submitted by Jim Thesiger on 20 May, 2008 - 16:20

QBE Insurance Group (QBE) raised its proposed price for each IAG share to $0.90 cash and 0.145 QBE shares (previously $0.70 and 0.142) from Australian stockmarket analyst Macquarie Research Equities.

QBE Insurance Group (QBE) Increases proposed price

Event: Revised offer:

QBE today raised its proposed price for each IAG share to $0.90 cash and 0.145 QBE shares (previously $0.70 and 0.142), a lift of c6% based on QBE's last traded price prior to the announcement. The new offer was referred to as "final" by QBE and comes on the day that QBE's original merger proposal was due to expire.

Impact: New deal terms still accretive in 1st year for QBE:

QBE stated that the new proposed price would still satisfy their acquisition criteria, which includes EPS accretion in year 1. However, QBE's Chairman said that weekend discussions with his IAG counterpart suggested the new metrics were "well short of their expectations".

Action: Price the sticking point:

IAG today acknowledged the revised offer and responded that (1) the new proposal would be discussed at tomorrow's Board meeting, but the initial reaction was that it "fell short of fair value" (2) IAG will update the market tomorrow post this meeting (3) IAG are willing to discuss any proposals that more closely reflect their view of the company's value.

Valuation: Restricted

We are currently restricted on QBE and cannot provide a price target or rating.

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