Suncorp bids for insurer Promina

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Banking and insurance group Suncorp has bid 7.8bn Australian dollars ($5.8bn; £3.1bn) for rival Promina.

Promina said it was "favourably disposed" towards the deal, which would be one of the largest takeovers in Australian corporate history.

Suncorp is Australia's fourth-largest general insurer and sixth-biggest bank, while Promina is one of the country's biggest car and house insurers.

A record $135bn of takeovers has been announced in Australia this year.

Industry consolidation

Suncorp said a tie-up with Promina would improve its geographical presence, increase its wealth management and life insurance business, and provide significant cost savings and efficiency gains.

The takeover would create the country's number two insurer behind Insurance Australia Group.

Promina's shares rose 13% on news of the talks, but Suncorp's shares fell 0.5%, with investors fearing that it could become a bid target.

Many market watchers think Suncorp's approach for Promina could trigger a wider round of takeovers involving the banking and insurance sector.

"There could be other moves as well. One could be Suncorp," said Paul Xiradis, chief executive of fund manager Ausbil Dexia.

The Australian Competition and Consumer Commission said it would look at any merger involving Promina and Suncorp to see if it raised competition issues.