Promina

Suncorp (SUN) and Promina (PMN) both have a retained Hold/Medium Risk shares recommendation and 12 month share price targets of $21 and $7.40 respectively from stock analyst Citigroup Investment Research (CIR). Independent Expert Grant Samuel on Suncorp's offer for Promina have commented that the offer is fair and reasonable. It values the consideration at A$7.10 to A$7.20 compared with its fair value of Promina inclusive of a control premium of A$6.46 to A$7.33 per share. Costs Down by A$40m — Suncorp has lowered its estimate of pre-tax integration costs from A$395m to A$355m, with a reduced estimate for IT spend. Suncorp has also confirmed a capital raising of more than A$1bn to part fund the cash component of the offer to Promina shareholders. The precise amount is expected to be around A$1.15bn. More detail on the likely sources for A$225m of pre-tax synergies has been provided though there is still no quantum assigned to each area. This appears to be because Suncorp has, to date, performed no more than a high level due diligence review of Promina. Proforma financials show a FY06 profit of A$1.4bn for the merged group and A$11bn of net assets.

Citigroup Investment Research (CIR) have retained their Hold, Medium risk recommendation. They have a spot valuation of $5.15 and a 12 month share price target of $5.75. They are in the view that the stock's defensive qualities remain the stock's main attraction.

Promina Group Limited is listed on the Australian Stock Exchange (ASX) under stock code PMN. You can view their investor website here. The company's principal activity is in the provision of general insurance and financial services. Check your charts!