Austria's Vienna Insurance acquires Erste unit
VIENNA (Reuters) - Austria's Vienna Insurance Group (VIGR.VI) said it would acquire all the insurance activities of Erste Bank (ERST.VI) for 1.4 billion euros ($2.2 billion) and planned a capital increase to fund the deal.
"Vienna Insurance Group takes advantage of a unique opportunity to further implement its strategy for sustained growth in CEE (Central and East Europe). This transaction makes us the No. 1 insurance company among the international insurers operating in CEE," it said in a statement late on Wednesday.
It said the transaction was subject to regulatory approval and was expect to close in the third quarter of 2008.
"Erste Bank's insurance activities consist of two main entities: s Versicherung Group with operations in Austria, Czech Republic, Slovakia, Hungary and Croatia and BCR Asigurari Group with operations in Romania," the statement said.
s Versicherung Group comprises primarily life insurance activities, whereas BCR Asigurari Group has both life and nonlife
insurance, according to the statement.
A similar Erste Bank statement put the transaction at 1.445 billion euros.
Vienna Insurance said it already had a small stake in s Versicherung.
The two companies also agreed a distribution arrangement that Vienna Insurance said gave it access to Erste Bank's network with more than 16 million clients and more than 2,900 branches.
The announcement was made after the Austrian stock market had closed.
Vienna Insurance, already eastern Europe's second biggest insurer, said it would raise between 1.2 and 1.4 billion euros to fund the acquisition and expansion in central and east Europe.
It said it planned a rights issue of 0.9 to 1.0 billion euros, raising the remainder on the capital markets. Timing would be announced later.
Erste Bank, central Europe's second biggest lender, said the proceeds would be used to strengthen its capital base.
It said the deal was signed earlier on Wednesday by the chief executives of the two companies.
The cooperation deal would give Erste Bank access to 10 million customers of Vienna Insurance in the various countries.
The deal covers Austria, Croatia, Romania, the Czech Republic, Serbia, Slovakia, Ukraine and Hungary.
(Reporting by Paul Bolding; Editing by Andre Grenon, Phil Berlowitz)
