QBE backs away from IAG offer

Australian insurer QBE has abandoned its attempts to take over Insurance Australia Group (IAG). After revising its offer twice in recent weeks, QBE finally withdrew the cash and shares offer, commenting that its bid still fell well short of IAG’s expectations.

A QBE statement said: “IAG’s shareholders would have benefited from substantial earnings per share accretion in year one from the significant synergies and diversification benefits of the merged group.”

In a statement to the Australian Stock Exchange (ASE), IAG said the offer was “priced opportunistically to take advantage of the short-term weakness in IAG’s share price, primarily caused by a low point in the insurance cycles of IAG’s core markets”.

Further indications of weakened performance from IAG are likely to come under scrutiny in the Australian market. If accepted, it would have been the largest insurance sector takeover in ASE history.