MBF Board recommends $2.41 billion proposal from BUPA Australia
Release date: 14 December 2007
MBF Australia Limited ('MBF') today announced the MBF Board has recommended a $2.41 billion proposal from BUPA Australia to combine the MBF and BUPA Australia businesses.
In recommending the proposal to the MBF Council and MBF contributors, the Board believes it offers a significant value premium for policyholders over demutualisation and listing.
The Board's recommendation must now be put to the MBF Council for approval and, if approved, then referred to a meeting of contributors for their consideration.
Under the proposal, eligible MBF contributors would receive a cash payment while, importantly, their existing health insurance policies and benefits would be unchanged.
The size of the cash payment, which eligible MBF contributors can expect to receive, will depend on the type and membership scale of their policies and length of tenure. MBF Chairman, Mr John Conde, said the combined group would retain the iconic MBF brand.
"Strategically and financially, this proposal makes a lot of sense for MBF and its contributors", Mr Conde said. "The BUPA transaction is preferable to the demutualisation and listing. In the Board's view, it is in the best interests of contributors.
"MBF is strong in Queensland, New South Wales and Tasmania while BUPA Australia's brands - HBA and Mutual Community - are strong in Victoria and South Australia.
"Together, the two businesses will create a competitive private health insurer with a national footprint, something that MBF has long aspired to achieve. The combined businesses will also be in a stronger position to provide affordable health insurance, greater efficiencies and improved services for our customers."
Mr Conde said the Board of the combined group would comprise six directors, three each from MBF and BUPA.
MBF Managing Director and Chief Executive Officer, Eric Dodd, would become managing director of the combined group to guide the implementation of the merger before making the transition to a non-executive board role.
BUPA Australia's Managing Director, Richard Bowden, would support Mr Dodd as his deputy. John Conde would be Chairman of the combined group.
Mr Dodd said advice to the MBF Board estimated the market capitalisation of a listed MBF at up to $1.8 billion. On this basis, the BUPA proposal offers a premium of at least 34%.
"This offer is compelling and represents a very attractive premium for MBF contributors," Mr Dodd said. "It will allow MBF to achieve its operational and strategic objectives more quickly than if it had demutualised and listed."
The ACCC has said it would not oppose the merger. The BUPA Australia proposal will be implemented by way of an MBF scheme of arrangement. A merger implementation deed has been entered into between MBF and BUPA Australia.
At the scheme meeting, eligible MBF contributors and company members will be entitled to vote. The scheme meeting is likely to be held during the first half of 2008 and contributors will receive information about the merger proposal prior to the meeting.
Media Contact: David Jones MBF Public Affairs 0417 232 246
About MBF:
MBF is Australia's largest, non-government private health insurer covering nearly 2 million people. MBF provides private health insurance throughout Australia and is the number one or number two private health insurer in Queensland, New South Wales, Tasmania and the Northern Territory. In addition to its core private health insurance business, the MBF group of companies offer life and travel insurance as well as financial planning services through ClearView Retirement Solutions. In the year ended 30 June 2007, MBF posted a 23.5 % rise in consolidated net profit after tax of $223.5 million.
About BUPA Australia:
BUPA Australia is the second-largest, non-government private health insurer after MBF, covering more than 1 million people. Its private health insurance businesses are HBA and Mutual Community. HBA is ranked second to Medibank Private in Victoria and Mutual Community is the number one private health insurer in South Australia. BUPA Australia is part of the international BUPA Group, a leading healthcare company serving over 8 million customers.
