Daily Brief Australia: Costa Group Holdings, Qbe Insurance, Symbio Holdings and more

In today’s briefing:

Costa Group (CGC AU): Binding Proposal Comes with Risks
QBE Insurance – COR 109% in N America Commercial, Where Growth Is High | Debt Surges USD700m in 1H23
Symbio (SYM AU): Superloop’s Best and Final Offer

Costa Group (CGC AU): Binding Proposal Comes with Risks

Costa Group Holdings (CGC AU) has entered a scheme implementation deed with Paine Schwartz Partners (PSP) led consortium at A$3.20 per share.
The key conditions are regulatory and shareholder approval. China SAMR regulatory approval poses a risk, primarily related to timing. Costa anticipates completion in 1Q24.
The headcount test related to the retail vote remains a risk. The risk/reward is unfavourable as the deal break downside (10%+) outweighs the offer’s upside (3.6% at last close).

QBE Insurance is seeing a deteriorating combined operating ratio, in part due to CAT events and it unclear to us how underwriting, exposures will immediately improve
Net profit is nearly static, USD750m in FY21, USD770m in FY22. USD400m profit in 1H23 may note repeat in 2H23, due in part to USD700m more debt in interim.
North America net earned premiums are seeing far more distribution toward Commercial, where the COR is especially poor at 109% in 1H23

Symbio Holdings (SYM AU) disclosed a revised indicative “best and final” proposal from Superloop Ltd (SLC AU). The terms (A$1.425 cash and 2.14 SLC shares per SYM share) remain unchanged.
The two key changes are there is no due diligence condition and a mix-and-match option subject to scale back to achieve a maximum of 60% cash or 60% scrip.
The offer is conditional on entering a scheme implementation agreement by 29 September. The offer is palatable and the Board is likely to succumb and sign a binding agreement.

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