Folks,Commsec apparently believes that there is only a 30%...

Folks,

Commsec apparently believes that there is only a 30% chance of gaining regulatory approval. Ref article below. Being filed next week with the ACCC. I guess that will put the lid on the sp until that hurdle is over.

(Sir) LUnchalot

Suncorp drafts Promina deal
Alex Tilbury
October 21, 2006 12:00am
Article from: Herald Sun
SUNCORP's top bank teller John Mulcahy and a dozen advisers will remain in Sydney this weekend fine-tuning the draft of the group's buyout of Promina, ahead of its annual meeting on Wednesday.
It is understood there have been "no real sticking points" bar the "nit-picking" over Suncorp's business model.
Suncorp is tipped to unveil a rights issue of about $1 billion on Monday to help fund the cash portion of its $7.9 billion cash and scrip deal with Promina.
Suncorp's team has also been trying to retain the services of many of Promina's key personnel.
"As it is, we are trying to capture all their expertise which creates the maximum value for the combined entity," a spokesman said, although the chief's role will likely go to 55-year-old Mr Mulcahy over Promina boss Mike Wilkins.
"There have been a couple of investors who have done well out of this company (Promina) but this will be an organisation which has banking, wealth management and insurance, although largely insurance."
Broker Merrill Lynch believed Suncorp's comment that management positions were non-negotiable in the proposed merger with Promina because it was paying a significant premium "misses the fundamental point that Suncorp is paying it with shareholder money, and Promina's shareholders are in effect Suncorp shareholders in a 77 per cent scrip paid offer".
Promina's board of directors - chaired by Leo Tutt - convened yesterday to discuss the merger implementation agreement for the first time.
Break fees are said to have been agreed on both sides - which is unusual as Promina wanted to secure a break fee in the event Suncorp was taken over - in the order of $70 million and $80 million each, if the deal does not proceed.
CommSec estimates there is just a 30 per cent chance of Suncorp winning regulatory approval for the deal.
A Suncorp spokesman said the group was still getting its ACCC submission ready, and would file it with the commission next week.
Suncorp's insurance margins were high at 19 per cent on average, whereas Promina's were one of the cheapest at 9 per cent, so analysts predict higher premiums may become reality for some consumers.
"If you allow Suncorp to manipulate the market in their favour, it is quite a big call and I am not sure the ACCC will approve it and that is why the share price is a bit lower," said Shaw Stockbroking banking and insurance analyst David McDonald.
Promina's lower premiums stemmed from its former international owners and the culture of value remained.