QBE revises IAG bid

by Gill Montia

Story link: QBE revises IAG bid

QBE Insurance Group, Australia’s leading insurer by premium income, has raised its bid for Insurance Australia Group (IAG) to A$8.7 billion (US$8.3 billion).

QBE is now offering 0.145 of its shares and A$0.90 in cash for each IAG share, up from 0.142 of its own shares and A$0.70 in cash.

The revised bid is in line with analysts’ expectations but IAG chairman, James Strong, has indicated that he believes the offer undervalues the business.

Further negotiations will be taking place at a meeting to be held early this week.

Standard & Poor have recently cut IAG’s AA- credit rating and it is unlikely that QBE will have to engage with a rival bidder because IAG’s earnings are expected to fall substantially in 2008

QBE says it would expect the acquisition would be earnings per share accretive during the first year.