Suncorp pays $9b for Promina

SYDNEY - Suncorp-Metway has agreed to buy Promina Group for A$7.9 billion ($9 billion) in cash and stock, seeking to double policy sales and become Australia's second-largest car and home insurer.

Suncorp will sell as much as A$1.9 billion of stock to fund the deal, which values Promina shares at A$7.65 each, 13 per cent more than their closing price Friday, Brisbane-based Suncorp said yesterday.

Buying Sydney-based Promina may help Suncorp chief executive John Mulcahy to reverse a slump in premium growth.

Suncorp will pay four times the amount Promina raised in a share sale in 2003.

Shares in Suncorp slid A$1.48 to A$21.22 before recovering to A$21.60. Promina stock rose A15c, or 2.2 per cent, to A$6.94, taking this year's gain to 44 per cent.

Suncorp announced plans to bid for Promina on October 12. Promina shareholders, who would own 30 per cent of the combined group, will vote on the plan in February.

Royal & Sun Alliance sold Promina in a A$1.88 billion initial public offering in May 2003.

- BLOOMBERG