Suncorp caught up in US acquisition rumours
A US private equity firm has its eye on Suncorp, according to market rumours – but sources close to the insurer says it won’t go down this track.
The Australian newspaper says New York-based JC Flowers made the offer to Suncorp around the start of the year.
The rumour has surfaced as Suncorp struggles to find capital usually provided by the insurance business, which has suffered due to extreme weather over the past three reporting seasons [see following article].
Morningstar analyst David Walker told insuranceNEWS.com.au the idea of private equity interest is a new angle on how Suncorp might be able to dispose of its bank.
“This is difficult because the Australian Competition and Consumer Commission has said it’s not disposed to approve further mergers and acquisitions within the Australian banking sector,” he said. “That rules out the most likely combinations – Westpac or ANZ or maybe a merger with another regional.”
Mr Walker says JC Flowers has a record of investing in distressed financial services businesses, “so maybe it has been looking at Suncorp”.
“But my take on it is it’s not news, it’s unfounded speculation. The media is interested in it because it’s a new angle on what is a difficult situation.”
A Suncorp spokesman told insuranceNEWS.com.au the company does not comment on media speculation.
Sources close to the insurer say there is little truth to the rumour and it is unlikely there will be any talks with JC Flowers, whose Australian chairman is former Westpac CEO David Morgan. In 2006 Westpac offered $23 a share to take over Suncorp, but was rebuffed. On Friday its value was $7.90 a share.
Mr Walker says he believes Suncorp is most likely to demerge the bank and create a new listed regional bank.
“The Suncorp board’s choice of an insurance industry specialist, Patrick Snowball, as the new CEO, is telling,” he said. “It indicates the company sees its future in general insurance and maybe not banking.”
JC Flowers did not respond to calls by insuranceNEWS.com.au.
The Australian newspaper says New York-based JC Flowers made the offer to Suncorp around the start of the year.
The rumour has surfaced as Suncorp struggles to find capital usually provided by the insurance business, which has suffered due to extreme weather over the past three reporting seasons [see following article].
Morningstar analyst David Walker told insuranceNEWS.com.au the idea of private equity interest is a new angle on how Suncorp might be able to dispose of its bank.
“This is difficult because the Australian Competition and Consumer Commission has said it’s not disposed to approve further mergers and acquisitions within the Australian banking sector,” he said. “That rules out the most likely combinations – Westpac or ANZ or maybe a merger with another regional.”
Mr Walker says JC Flowers has a record of investing in distressed financial services businesses, “so maybe it has been looking at Suncorp”.
“But my take on it is it’s not news, it’s unfounded speculation. The media is interested in it because it’s a new angle on what is a difficult situation.”
A Suncorp spokesman told insuranceNEWS.com.au the company does not comment on media speculation.
Sources close to the insurer say there is little truth to the rumour and it is unlikely there will be any talks with JC Flowers, whose Australian chairman is former Westpac CEO David Morgan. In 2006 Westpac offered $23 a share to take over Suncorp, but was rebuffed. On Friday its value was $7.90 a share.
Mr Walker says he believes Suncorp is most likely to demerge the bank and create a new listed regional bank.
“The Suncorp board’s choice of an insurance industry specialist, Patrick Snowball, as the new CEO, is telling,” he said. “It indicates the company sees its future in general insurance and maybe not banking.”
JC Flowers did not respond to calls by insuranceNEWS.com.au.