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Vienna Insurance Group AG — M&A Activity 2008
Mar 26, 2008
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Download source fileeuro adhoc: Vienna Insurance Group / Mergers - Acquisitions - Takeovers / Vienna
Insurance Group acquires all Insurance Operations from Erste Bank (1)
Long-term partnership with Erste Bank in Austria and CEE (1)
Creating the leading insurance company in CEE (2)
Disclosure announcement transmitted by euro adhoc. The issuer is responsible
for the content of this announcement.
26.03.2008
Not for distribution in the United States, Canada, Japan and Australia.
Please note: this is a translation; only the German version of this release is
legally binding
Vienna Insurance Group has entered into an agreement with Erste Bank to acquire
all of Erste Bank's insurance activities including its operations in Austria,
Czech Republic, Slovakia, Hungary, Croatia and Romania for a cash consideration
of approximately EUR 1.4bn. As part of the transaction, a long-term
distribution agreement has been entered into, giving Vienna Insurance Group
access to Erste Bank's extensive distribution network with more than 16m
clients and more than 2,900 branches.
Vienna Insurance Group CEO Günter Geyer notes: "With this acquisition and long-
term cooperation, Vienna Insurance Group takes advantage of a unique
opportunity to further implement its strategy for sustained growth in CEE. This
transaction makes us the No. 1 insurance company among the international
insurers operating in CEE and, importantly, we also become a leading player in
the life insurance segment, which we see as our future growth engine in Austria
and CEE. Two financial groups with extensive financial services know-how are
joining forces in this region to build a lasting partnership with substantial
benefits for customers, employees and shareholders alike."
Both the acquisition and the long-term agreement are subject to customary
regulatory and anti-trust authority approvals. Closing of the transaction is
expected in the third quarter of 2008.
Transaction Overview
Erste Bank's insurance activities consist of two main entities: s Versicherung
Group with operations in Austria, Czech Republic, Slovakia, Hungary and Croatia
and BCR Asigurari Group with operations in Romania. s Versicherung Group
comprises primarily life insurance activities, whereas BCR Asigurari Group has
significant presence in both life and non-life insurance. The Vienna Insurance
Group already has small minority stakes in s Versicherung and s Versicherung's
subsidiaries through its subsidiary Donau Versicherung (3). Post-transaction,
Vienna Insurance Group will own about 95% in s Versicherung and its
subsidiaries with the remaining 5% of the life insurance operations owned by
Erste Bank and its subsidiaries. With regard to BCR Asigurari Group, Vienna
Insurance Group will acquire an 88.5% ownership from Erste Bank, with the
remainder owned by existing minority shareholders. Overall, the transaction
adds almost EUR 1.3bn based on gross written premiums for fiscal year 2007 to
Vienna Insurance Group - predominantly in the life insurance segment.
Vienna Insurance Group and Erste Bank have also concluded a 15 year preferred
mutual distribution partnership, in all countries in which the two groups are
present. This currently includes Austria, Croatia, Romania, the Czech Republic,
Serbia, Slovakia, Ukraine and Hungary. The distribution agreement will be
automatically renewed for an additional 10 years, unless terminated by one of
the parties 12 months prior to the initial expiration date.
Transaction rationale
The Vienna Insurance Group believes the transaction offers an excellent
opportunity to substantially reinforce its presence in CEE with compelling
benefits for all stake holders:
-
Creates No. 1 international insurance group in CEE
-
Long-term agreement with preferred access to Erste Bank's strong retail
distribution platform with more than 16m clients and more than 2,900 branches -
the bancassurance channel is poised to become the most important
distribution channel for life insurance policies and with its extensive
bancassurance experience, Vienna Insurance Group believes it is ideally
positioned to develop products and services tailored to this channel. As part
of this long-term sales and distribution agreement, the partners' products
will be offered to clients of both Vienna Insurance Group and Erste Bank -
Significant strengthening of Vienna Insurance Group's life insurance platform
via both the acquisition of the life insurance operations and also the access
to the bank distribution of Erste Bank. This enables Vienna Insurance Group
to capitalise on the attractive growth prospects in the CEE life insurance
markets, driven by strong economic growth, rapidly increasing life insurance
penetration levels and pension reforms in the region -
Substantial synergy potential resulting from extended product offering for
the distribution channels with considerable cross-selling potential between
Vienna Insurance Group and Erste Bank
Vienna Insurance Group believes the existing relationship with Erste Bank,
similar corporate culture and both parties' extensive transaction experience
will ensure a smooth execution of the transaction and integration of the
acquired entities.
Capital raising to fund transaction and further growth in the CEE region
The Vienna Insurance Group strives to have excellent capital resources at its
disposal at all times. In order to fund the transaction as well as to further
expand its growth in CEE and, especially, to finance further acquisitions in
Poland, the Ukraine and Hungary, the Vienna Insurance Group plans to raise in
total EUR 1.2-1.4bn. The Vienna Insurance Group intends to raise approximately
EUR 0.9 billion to approximately EUR 1.0 billion by way of a rights issue with
the remainder being raised in the hybrid capital market. Wiener Städtische
Wechselseitige Versicherungsanstalt-Vermögensverwaltung, the main shareholder
of Vienna Insurance Group with about 70%, has informed Vienna Insurance Group
that it will fully support the capital increase and that it intends to maintain
approximately the same percentage of ownership in Vienna Insurance Group after
the capital increase. The financing has been designed to maintain the strong
capitalisation and financial position of Vienna Insurance Group post-
transaction.
The exact timing and further details of the rights issue and hybrid debt issue
will be announced at a later stage.
(1) Pending official approval by the relevant authorities
(2) CEE region defined as: Bulgaria, Croatia, Poland, Romania, Serbia,
Slovakia, Czech Republic and Hungary
(3) Donau Versicherung owns 10% in s Versicherung in Austria directly, and 4.5%
in Pojišt´ovna Ceské sporitelny in Czech Republic, 3.3% in Poistovna Slovenskej
sporitelne in Slovakia, 9.0% in ERSTE Sparkassen Biztosító Zártkörüen Müködö
Részvénytársaság in Hungary and 7.4% in Erste Sparkassen osiguranje d.d. za
životno osiguranje in Croatia indirectly.
Disclaimer
This information constitutes neither an offer to sell nor a solicitation to buy
any securities of Wiener Städtische Versicherung AG Vienna Insurance Group
("VIG"). A public offer would only be made in Austria or in the Czech Republic
after publication of a prospectus prepared in accordance with the provisions of
the Austrian Capital Market Act or the Czech Capital Markets Act. Any
securities orders received prior to the commencement of a public offer will be
rejected. If a public offer is made in Austria or in the Czech Republic, a
prospectus prepared in accordance with the Austrian Capital Market Act or the
Czech Capital Markets Act will be published and will be available free of
charge (i) at the seat of Wiener Städtische Versicherung AG Vienna Insurance
Group, Schottenring 30, 1010 Vienna, during usual business hours, and, (ii) in
case of the offering in the Czech Republic, the prospectus will be available
also on Vienna Insurance Group's internet pages
http://www.viennainsurancegroup.com and on internet pages of participating
securities brokers.
This press release and the information contained herein are not for
distribution in or into the United States of America and must not be
distributed to U.S. persons (as defined in Regulation S of the U.S. Securities
Act of 1933, as amended ("Securities Act")) or to publications with a general
circulation in the United States. This press release does not constitute an
offer to sell or a solicitation of an offer to purchase any securities in the
United States. The securities of Vienna Insurance Group have not been and will
not be registered under the Securities Act and may not be offered, sold or
delivered within the United States or to U.S. persons absent registration under
or an applicable exemption from the registration requirements of the Securities
Act. There will be no public offer of securities of Vienna Insurance Group in
the United States.
This press release is directed only to persons (i) who are outside the United
Kingdom or (ii) who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2001 (as amended) (the "Order") or (iii)
who fall within Article 49(2)(a) to (d) ("high net worth companies,
unincorporated associations, etc.") of the Order (all such persons together
being referred to as "Relevant Persons"). Any person who is not a Relevant
Person must not act or rely on this communication or any of its contents. Any
investment or investment activity to which this communication relates is
available only to relevant persons and will be engaged in only with Relevant
Persons.
This press release contains forward-looking statements based on the currently
held beliefs and assumptions of the management of Vienna Insurance Group, which
are expressed in good faith and, in their opinion, reasonable. These
statements may be identified by words such as "expectation" or "target" and
similar expressions, or by their context. Forward-looking statements involve
known and unknown risks, uncertainties and other factors, which may cause the
actual results, financial condition, performance, or achievements of Vienna
Insurance Group, or results of the insurance industry generally, to differ
materially from the results, financial condition, performance or achievements
express or implied by such forward-looking statements. Given these risks,
uncertainties and other factors, recipients of this press release are cautioned
not to place undue reliance on these forward-looking statements. Vienna
Insurance Group disclaims any obligation to update these forward-looking
statements to reflect future events or developments.
Further inquiry note:
Contact:
WIENER STÄDTISCHE Versicherung AG
Vienna Insurance Group
Barbara Hagen-Grötschnig, MBA
Corporate Communications
Schottenring 30, 1010 Vienna
Tel.: +43 (0)50 350-21027
Fax: +43 (0)50 350 99-21027
E-Mail: [email protected]
emitter: Vienna Insurance Group
Schottenring 30
A-1011 Wien
phone: +43(0)50 350-21027
FAX: +43(0)50 350 99-21027
mail: [email protected]
WWW: www.wienerstaedtische.at
sector: Insurance
ISIN: AT0000908504
indexes: WBI, ATX Prime, ATX
stockmarkets: stock market: Prague Stock Exchange, official market: Wiener Börse
AG
language: English