Insurance Australia Group Limited (IAG) is aware that Mr David Tweed, through his companies National Share Purchasing Corporation Pty Ltd (NSPC) and Direct Share Purchasing Corporation Pty Ltd (DSPC), has launched more unsolicited offers for IAG shares.
IAG does not endorse any unsolicited offer by NSPC or DSPC or any other company.
NSPC is offering shareholders $8.10 per share, paid out over 18 annual instalments of 45 cents per share. This means that shareholders will not receive final payment until the year 2023.
An offer payable over such a long time should be viewed with caution, given the time value of money, the lack of any security over future payments and potentially adverse tax consequences.
Shareholders who accept the offer may be treated for tax purposes as having disposed of their IAG shares now even though they will not receive final payment for 18 years. Shareholders are also not offered any security by NSPC to back its obligation to make instalment payments over the 18 years.
DSPC is offering shareholders $3.50 per share, which is more than $1.50 below the lowest price at which IAG's shares have traded in the past year. Shareholders who sell at this price will be doing so at a significant financial disadvantage relative to what they could obtain in the open market.
IAG Group Company Secretary & Head of Investor Relations, Ms Anne O’Driscoll, said that following the Group’s warning on 31 May 2005, a number of shareholders had notified the Group they had received offers from NSPC and DSPC.
Both offers also include a grant of power of attorney from the shareholder to NSPC/DSPC, which has significant legal consequences.
This is the third series of unsolicited offers to acquire shares in IAG by companies associated with Mr Tweed in as many years. National Exchange, another company associated with Mr Tweed, made unsolicited offers on two previous occasions, in January 2003 and May 2002. Although IAG wrote to shareholders individually on each occasion, thousands of holders accepted the offers even though they were for less than the market price of the shares.
IAG has informed the Australian Securities & Investments Commission (ASIC) of the situation.
Shareholders who receive any unsolicited offer are urged to read the document carefully and obtain professional advice before deciding whether or not to accept the offer.
Please note that the advice in this note has been prepared without taking into account the objectives, financial situation or needs of particular shareholders. Before acting on this advice, shareholders should consider whether it is appropriate to their particular circumstances. Shareholders should also read any offer document carefully and consult a professional advisor before making a decision.