Elders sells insurance business to QBE for A$315 million
31 Jul 2009
Australian rural services group Elders Ltd today said that the company has signed an agreement with Australian insurance giant QBE Insurance Group to sell its insurance arm and a 75-per cent share in its insurance agency distribution network at a cost of A$270 million.
QBE will also subscribe for 112.5 million shares in Elders, equivalent to 12.1 per cent of issued shares, totaling A$45 million, the company said in a statement to the Australian Stock Exchange. The acquisition price of 40 cents each compares with Elders last trading price of 27.5 cents.
Elders chief executive Malcolm Jackman said the ownership and agency structure aligned the interests of Elders and QBE in the development of the insurance operations and retained the exceptional value and goodwill of the Elders brand through rural and regional Australia.
"Total cash proceeds of approximately $315 million will be used to strengthen Elders' balance sheet," he added.
The company also said the transaction maintained Elders' differentiated position in regards to its rural service offering and created and provided for "a strong long-term relationship" with QBE.
QBE, Australia's top insurer by premium income, said the transaction would be financed entirely from existing cash resources.
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