New ING Canada entity: Hunter or the Hunted?

Once ING Canada morphs into a publicly-traded entity (and adopts a new name, as expected), it remains an open question whether the new entity will become the hunter or the hunted when it comes to potential merger and acquisitions activity in the future.ING Groep, formerly the parent company of the soon-to-be-Canadian insurer, is selling its shares in ING Canada, meaning ING Canada will become a 100% publicly traded company on the TSX stock exchange, possibly by the end of February.”Putting ING Canada (as it is currently called) into the ‘Canadian owned’ column changes the industry landscape,” Joel Baker, president and CEO of MSA Research Inc., commented in a post on the MSA Research Web site. “Depending on how it is managed, the ‘new’ ING Canada group has the potential and the acumen to continue its growth through acquisition path and give it even greater scale. However, it also opens itself up to friendly or not-so-friendly takeover by another entity — Canadian or not.”Baker notes that if the Dutch parent company manages to sell all of its current offering, plus an “overallotment” of about 5.1 million shares, and the shares quickly trade upward, “the Canadian group will have the option of raising further capital — for itself, this time — to fund a merger of acquisition.”But if the value of the shares doesn’t increase, Baker observes, “the newly minted Canadian group will have to wait for a more opportune time to raise additional capital, all the while leaving itself open to takeover.”Baker observed the current trading price of a company share is down about 50% from its April 2006 high of $60. “It is a sorry exit” for the Dutch parent company, which entered the Canadian P&C market several years ago with its purchase of The Halifax, Baker writes.He commented further that the sale “brings no new capital to the Canadian group. However, it does free management from the distraction of having to deal with the enormous troubled parent, enabling it to focus on being a truly Canadian industry leading company.”