Wesfarmers to offload Lumley Life
Wesfarmers is privy to and concurs with UK-based Edward Lumley Holdings (ELH) attempts to sell offLumley Lifeprior to the Perth group’s planned purchase of the Lumley Group, as the life arm does not fit strategically into Wesfarmers’ corporate structure.
“We don’t own the [Edward Lumley] business, but we’re across what’s going on over there [in the UK]. It may or may not come off,” says Wesfarmers finance director Richard Goyder.
The life arm is a part of the Lumley business Wesfarmers, one of Australia’s largest public companies, would prefer to offload - be it before or after it acquires the group.
According to Goyder, “We’re more interested in the short-tail businesses [general insurance] rather than the longer-tail business [life], which involves taking on a greater level of liability.”
At the beginning of July Wesfarmers confirmed an earlier $320 million estimation price for the acquisition of all ELH shares plus the assumption by it of external debt of some $55 million.
However Wesfarmers at the time also revealed that “the price was subject to adjustment for the level of net assets at completion” - to account for the included or excluded life business.
Wesfarmers intends to operate the acquired Lumley businesses in parallel with its existing specialist rural and small business insurer, Wesfarmers Federation Insurance, in a separate new insurance business unit which will make a full contribution to the group’s results from the second quarter of the 2003/04 financial year.
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