Medibank 'will be takeover target': NIB
"I'd be surprised if it's not the subject of overseas interest once it's listed," NIB chief executive Mark Fitzgibbon said, as the government announced a scoping study into the long-mooted sale.
Asked whether NIB would be interested, Mr Fitzgibbon said it was not part of the insurer's strategic plan but "never say never".
NIB is Australia's only listed private health insurer, with more than 470,000 policyholders, and has gained profile among investment banks in expectation of the Medibank sale. NIB has 18 branches, Medibank has more than 120.
Medibank is one of two big private health insurers, alongside Bupa. It recently reported a jump in annual profit to $232.7 million, on revenues of $5.34 billion.
The three-month scoping study, which will report to the government before next year's budget, will provide recommendations on the sale method, timing, regulatory issues, readiness and estimated proceeds.
The selloff has long been considered controversial given Medibank's capital base has almost entirely been built on taxpayer contributions.
Mr Fitzgibbon said a float was more likely than a trade sale because previous demutualisations of insurers, including NIB, had given members the cash.
"When they sell it, members will say, 'How come we're not getting the money?' They will be a bit pissed off about that."
It is suggested Medibank's 3.8 million members will receive some form of preferential eligibility or discount in a float.
As reported in Fairfax Media, the sale is not expected until late next year, or even 2015.
Amid rumblings that Medibank is not in peak condition for a sale, Mr Fitzgibbon said investors made decisions on what a business would do, rather than what it had done.
Finance Minister Mathias Cormann said the sale proceeds would "allow the government to fund other policy priorities or pay off debt", and the government had not made any decisions about the timing and structure.
Medibank Private chairman Elizabeth Alexander said the insurer looked forward "to working with the government on the future of the company".
The former Labor government extracted hundreds of millions in dividends from Medibank since it converted to "for profit" status, including a $300 million "special" dividend paid in August.
Frequently Asked Questions about this Article…
Medibank is seen as a potential takeover target, especially for overseas insurers, due to its strong market presence and profitability. Once listed on the sharemarket, it is expected to attract significant interest.
While NIB has not included acquiring Medibank in its strategic plan, its CEO, Mark Fitzgibbon, mentioned 'never say never,' indicating a potential openness to the idea in the future.
The scoping study will provide recommendations on the sale method, timing, regulatory issues, readiness, and estimated proceeds of Medibank's sale. It is a crucial step in determining how the sale will proceed.
Medibank's 3.8 million members might receive preferential eligibility or discounts in a float, although there is concern about members not receiving direct financial benefits from the sale.
The sale of Medibank is not expected until late next year or possibly in 2015, according to reports from Fairfax Media.
Medibank recently reported a significant increase in annual profit to $232.7 million, with revenues reaching $5.34 billion, highlighting its strong financial performance.
The proceeds from the Medibank sale could allow the government to fund other policy priorities or pay off debt, as stated by Finance Minister Mathias Cormann.
The sale is controversial because Medibank's capital base has largely been built on taxpayer contributions, raising concerns about the fairness of privatizing a publicly funded entity.
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