Biggest deal likely
RSA poised to accept £7.2bn takeover offer
Stephen Hester: moved to RSA after running RBS
RSA Insurance Group is subject to a £7.2 billion takeover proposal from Canada’s Intact Financial Corp and Danish insurer Tryg in what is poised to be the biggest acquisition of a UK-listed company this year.
A potential cash bid of 685p per share would represent a 49% premium to RSA’s Wednesday closing price.
Shareholders would also receive the previously-announced interim dividend of 8p per share, according to a statement from RSA. The company has indicated it would likely recommend the offer.
Shares of RSA surged 46% in late London trading to close at 670p.
The deal would break-up the 300-year-old former Royal & Sun Alliance. Toronto-based Intact would keep RSA’s Canadian business as well as its UK and international division, according to the statement. Tryg plans to keep RSA’s operations in Sweden and Norway, while RSA’s Denmark business would be jointly owned by the two firms.
RSA offers a range of general and specialty insurance products and has long been viewed as a possible takeover target. In 2015, Zurich Insurance Group abandoned a £5.6 billion bid for the company.
Its CEO is Stephen Hester who joined the company after leaving Royal Bank of Scotland where he succeeded Fred Goodwin following the bank’s collapse. He shored up the RSA balance sheet with a £773m rights issue and sold some of its international businesses.
The London-based insurer said earlier that its operations in the UK., Canada and Scandinavia are all performing in line or ahead of expectations, excluding the impact of Covid-19 claims. Group business operating profit was up in the first nine months of the year, it said in a statement.
Acquisitions involving companies in the insurance industry are up nearly 50% this year to $130 billion, according to data compiled by Bloomberg.
Last month, LV= said it is in exclusive talks with Bain Capital about a potential deal.
If the deal for RSA goes through it would become the latest UK insurer to be bought by an overseas rival.
In August, Hastings accepted a £1.7bn bid from Finnish insurer Sampo and South Africa’s Rand Merchant. Germany’s Allianz bought general insurance businesses from LV and Legal & General