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It’s green lights for Insurance Australia Group (ASX:IAG) and its $855 million, 25-year alliance with RACQ Insurance, with the Australian Competition and Consumer Commission today declaring it wouldn’t oppose the takeover.
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Key to the ACCC nod, the watchdog said on Thursday, was that “Suncorp, Allianz, QBE, and newer entrants like Youi would continue to compete” with IAG.
Also relevant was the fact that RACQ has fallen away from its competition since 2019.
(That is, of course, one of the reasons it said yes to the $855M buy-up.)
The RACQ will still be sticking around, though, with IAG Managing Director Nick Hawkins confirming it will “maintain brand and customer relationships.”
“This is a great first step in the regulatory process and recognises the benefits that would come from the two organisations working together as part of a 25-year strategic partnership agreement,” RACQ CEO David Carter said.
“We are just as confident today as we were when we first announced the partnership in the benefits that will come from our two organisations working together.”
The 25-year strategic partnership is exclusive, HotCopper understands, and will soon see IAG acquire 90% of RACQ’s current insurance underwriting business — focused entirely in Queensland for the time being.
IAG will be able to pick up the last 10% once the deal has been live for two years. At this stage, that’s looking like it will be sometime around mid-2027 at the earliest.
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To that end, IAG will make an up-front payment of $333 million to enter the distribution agreement. The buyer will also make a payment of shares equivalent to the expected net tangible asset value at the time of completion.
IAG has opened Thursday’s early morning trade up 2.1% at $8.70/sh.
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