NIB (ASX:NHF) share price backtracks despite acquisition news

a man with a pale face and bags under his eyes sits on the end of his bed with a thermometer in his mouth and a hand to his dishevelled head.

The NIB Holdings Ltd (ASX: NHF) share price is edging lower on Monday morning. This comes after the private health insurer announced an update on the takeover of a life and living insurance products and services company.

At the time of writing, NIB shares are fetching for $7.21, down 1.23%. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.06% to 7,461 points.

What did NIB announce?

According to its announcement, NIB advised that its New Zealand subsidiary nib NZ has agreed to purchase Kiwi Insurance. The latter is a wholly-owned subsidiary of Wellington-based Kiwi Group Holdings.

The total consideration to acquire 100% of the shares in Kiwi Insurance is said to be around $43 million. However, this deal is subject to outstanding regulatory approvals.

In addition to the takeover, nib NZ will enter into an exclusive arrangement with Kiwibank, another subsidiary of Kiwi Group. The bank will refer its retail customers to nib for life and living insurance needs, increasing its members by another 34,000.

NIB is planning on funding the acquisition through a combination of existing capital and new debt. Pleasingly, the transaction is expected to be accretive to earnings per share (EPS).

Completion of the deal is being targeted for early 2022.

The acquisition is also expected to not have a material financial impact on the group’s FY22’s earnings.

NIB managing director Mark Fitzgibbon commented:

In New Zealand, living, life and health insurance are complementary products so often purchased as a package. We‘re responding to this preference with what should be a more integrated and seamless experience for members and customers. And it means more people will benefit from the investment we’re making in more personalised health risk assessment and management.

NIB share price snapshot

NIB shares have been on the move since this time last year, rocketing 66% over the period. When looking at year-to-date, its shares are up around 21%.

Based on today’s price, NIB commands a market capitalisation of roughly $3.32 billion and has approximately 458 million shares outstanding.

The post NIB (ASX:NHF) share price backtracks despite acquisition news appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras owns shares of NIB Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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