KBC Launches Tender Offer on Bulgaria's DZI Insurance

Belgian financial services group KBC said on Thursday it would launch a public tender offer on its Bulgarian insurance subsidiary DZI, in which it currently holds 90.35%.

The bid price is set at BGN 71 per share, while the maximum total consideration amounts to BGN 26.5 M (approximately EUR 13.5 M).

The tender offer is expected to start in the fourth quarter of 2011 and to expire at the beginning of 2012.

"The transaction will not have a relevant impact on KBC's capital and solvency positions and fits within KBC's ambition to further implement its bancassurance business model in Bulgaria, while at the same time increasing corporate governance and optimising DZI's shareholder structure," the group said in a statement.

The European Commission has granted KBC permission to proceed with this bid, which is still subject to the approval of the Bulgarian regulatory authorities.

DZI, the former Communist-era state monopoly, is one of the leading companies on the Bulgarian insurance market, competing with the local unit of Germany's Allianz and Bulstrad, owned by Vienna Insurance Group.

KBC finalized the acquisition of 70% stake in Bulgarian insurer DZI Insurance from Bulgarian firm Kontrakt Sofia for EUR 185 M in the middle of August 2007 and launched shortly after that a public bid for the remaining minority stake.

As part of the deal, KBC also acquired DZI INVEST, a securities broker active on the Bulgarian Stock Exchange.

DZI Insurance was created as a state insurer in 1946 and has more than 60 years of experience, knowledge and understanding of the markets and customers in all insurance segments.

The insurer and the DZI Bank were part of the financial group built by banker Emil Kyulev who was shot dead October 2005.

His spouse Vesela Kyuleva has sold her majority stake in the bank to Greece's Eurobank EFG Ergasias for EUR 158 M.

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