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Australia's QBE Insurance Scraps IAG Bid

QBE Insurance dropped its A$8.7 billion bid (US$8.4 billion) bid proposal for Insurance Australia Group after IAG rejected it as too low, triggering an 8 percent slide in IAG's shares.

Rob Griffith

IAG, Australia's top home and car insurer, said late on Tuesday that QBE's sweetened offer, pitched at a 10 percent premium to IAG's share price before their deal discussions were announced last month, was still too low.

QBE raised its bid by 6 percent this week to 0.145 QBE shares and A$0.90 in cash for each IAG share, looking to secure a board recommendation on what it called its final offer.

"QBE understands its final proposal on price was well short of IAG's expectations," QBE said on Wednesday in statement withdrawing its proposal to take over IAG.

It said the relatively low premium was justified in light of IAG's falling profits over the past three years and its profit downgrade last month.

"QBE will now continue to focus on the pipeline of acquisitions that have been accumulating in recent months," Chief Executive Frank O'Halloran said in a statement.

He said the group was looking at opportunities in the Americas, Europe, Asia and Australia.

IAG shares fell 35 cents to a low A$3.88, and last traded down 7.8 percent at A$3.90, in line with where the shares were trading in April ahead of the first bid proposal.

QBE shares slipped 1 cent to A$25.66 in a broader market that was down 1.1 percent.

With household-name brands such as NRMA, IAG controls about 30 percent of Australia's general insurance market. QBE concentrates on commercial insurance.

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