Western Australia's farmers' cooperative Wesfarmers Ltd has agreed to sell its underwriting business in Australia and New Zealand to Insurance Australia Group Ltd (IAG). The said deal is valued at $1.845 billion, according to Business Spectator.
Wesfarmers told the Australian Securities Exchange in a statement that the transaction does not include its broking business in Australia, New Zealand, and the UK, or its premium funding operations in Australia and New Zealand. The acquisition includes the company's underwriting operations under its Lumley Insurance and WFI brands. The said deal also includes a 10-year distribution contract with Coles Insurance, the report detailed.
The acquisition will be funded through a combined subordinated debt and internal funds, ordinary equity, and a fully underwritten institutional placement worth $1.2 billion. The Wesfarmers shares are priced at $5.47 apiece, the report stated.
According to IAG, the integration is expected to be completed within two years, Business Spectator reported.
Mike Wilkins, managing director of IAG, said of the deal: "Wesfarmers' underwriting operations are highly complementary to our existing intermediated businesses in Australia and New Zealand and will be integrated with our CGU and NZI operations."
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