Wesfarmers set to buy Lumley
Oneof Australia’s largest public companies, Wesfarmers Limited, has emerged as the potential buyer of insurance and financial services group Lumley, entering into exclusive negotiations with Edward Lumley Holdings Limited (ELH), Lumley’s parent company.
Under the proposal, the ELH group will be restructured so that the existing shareholders will retain the UK and Irish operations and Wesfarmers would acquire ELH, which would effectively be the Australian and New Zealand operations.
Wesfarmers expects to acquire all ELH shares for approximately $320 million, which is a premium of about $110 million over project net assets at the completion of the acquisition. Wesfarmers will also assume the group’s external debt of around $55 million.
The Lumley group businesses will be operated in parallel with Wesfarmers’ existing insurance subsidiary, Wesfarmers Federation Insurance (WFI), with the Lumley brand to be retained in the Australian and New Zealand markets.
Wesfarmers was attracted by the strong and consistent revenue and profit growth performance of Lumley’s Australian and New Zealand operations, together with its “reputation for technical innovation, strong management and controls, reliability and high service standards”, according to Lumley.
Wesfarmers managing director Michael Chaney says, “It’s a very good fit with our insurance business and it has been managed conservatively from a risk point of view and also an investment point of view.”
Subject to approval by theAustralian Prudential Regulation Authority(APRA), the acquisition is expected to be finalised early in the financial year beginning July 2003.
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