Webb Henderson advises IAG on A$1.8b acquisition

by Sophie Schroder02 Jul 2014
Webb Henderson has advised IAG New Zealand on its acquisition of Lumley Insurance as part of the purchase of Wesfarmers’ trans-Tasman insurance underwriting businesses by IAG for A$1.845 billion.
 
The transaction was completed on Monday after obtaining regulatory approvals on both sides of the Tasman earlier this year.
 
It adds the Lumley business to IAG New Zealand’s existing brands including State Insurance, NZI and AMI Insurance.
 
The Webb Henderson team was led by partners Garth Sinclair and Michael Gartshore on the M&A side, and Mark Toner on the competition aspects.
 
They advised on all aspects of the New Zealand acquisition including due diligence, sale and purchase documentation, regulatory approvals and completion, and worked very closely with the senior management team at IAG New Zealand.
 
Gaining Commerce Commission clearance was one of the most important and more complicated aspects of the deal, Gartshore told NZ Lawyer.
 
“The other bit is that it’s insurance…in the last three to four years there has been uncertainty around the industry given the Christchurch earthquakes,” he says.
 
This latest transaction follows on from the 2012 acquisition by IAG New Zealand of the ongoing insurance business of AMI Insurance, which Webb Henderson also advised on. Commerce Commission clearance was required for this as well.
 
Sinclair says it’s been significant working across both of these transactions, which together are transformational for the business.
 
“The ability of the management team to understand the complexities of the businesses in a very short timeframe to successfully execute the transactions was impressive” he says.
 
In New Zealand the regulatory approvals included clearance from the Commerce Commission and approval from the Overseas Investment Office and Reserve Bank of New Zealand.
 
Given the existing presence and market position of IAG’s businesses in New Zealand, the application to the Commerce Commission for clearance of the transaction was the subject of significant scrutiny from competitors, the wider industry and commentators.
 
Toner, Webb Henderson’s competition, public policy and regulatory partner, says such a process can be a complicated business.
 
“Our approach is to work very closely with clients to obtain a detailed understanding of the competitive dynamics in the relevant markets and to present this effectively to the Commerce Commission,” he says.
 
“This includes analysing factors such as how technology can disrupt competition, emerging alternative business models, recent successful entry and potential market entry and the ability for remaining competitors to readily expand. The work involves detailed legal input integrated with sound economic analysis.”
 
Gartshore told NZ Lawyer that IAG could not have bought Lumley without the clearance, although had this been the case, it’s not certain what the next stage in the process would be.
 
The transaction has been significant for all parties involved; he says, adding that the aquisition of Lumley rounds out the IAG offering in New Zealand nicely.
 
Top tier firm Russell McVeagh represented Wesfarmers in New Zealand, while in Australia Herbert Smith Freehills acted for Wesfarmers and Minter Ellison advised IAG.
 

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