Insurance Australia Group (IAG) Update

Submitted by Jim Thesiger on 21 May, 2008 - 17:44

Here is an update on Insurance Australia Group (IAG) from sharemarket analyst Macquarie Research Equities.

Insurance Australia Group (IAG) Revised proposal deemed 'inadequate'

Event: Cannot recommend QBE's latest proposal to shareholders:

IAG's Board today announced that it cannot recommend QBE's latest scheme proposal ($0.90 cash + 0.145 QBE shares) to its shareholders. The Board considers the revised proposal to be (1) priced opportunistically (2) not reflective of IAG's underlying value and potential deal synergies (3) not fully developed.

Impact: Five weeks of discussions, but key terms unexplored:

While the announcement confirmed that IAG has engaged with QBE in discussions over the past five weeks, IAG stated that important terms and conditions (including adequate due diligence by both parties) had not been explored.

Action: IAG still willing to engage:

IAG announced that they remain willing to engage further with QBE with a view to securing what the Board considers to be a fully developed offer that provides an acceptable premium/price. Lastly, the announcement noted the option for QBE to approach IAG shareholders directly with their current proposal.

Valuation: Restricted

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