Suncorp Metway not a takeover target

Suncorp-Metway has seen its share price fall after takeover speculation abated. The reason was the announcement on 23 October 2006 that a formal agreement had been entered into with its own merger target, insurer Promina Group. Under the terms of the deal, each of the two entities must keep the other informed of any other deal that arises, with three days' warning.

A break fee of $A35m would also be payable by Promina, while Suncorp will incur such a liability if the competition regulator vetoes the merger.

This is a major merger which will cause a bit of stirring in the financial
world. This will not be great for competition but it will be great for
shareholders of Promina and Suncorp-Metway. Promina has always been priced below its value and this merger has taken it to a much more reasonable level. At this stage Promina is overvalued. If you don't own it I would not recommend getting in on either Suncorp-Metway or Promina until the regulators have looked at the deal.

Yesterday, Promina stock closed at $A6.92 while Suncorp lost $A1.29 to finish at $A21.41.

Good Luck investing