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RSA in talks on £7.2bn takeover
6th Nov 2020 07:03
(Sharecast News) - RSA Insurance is in talks to sell itself for £7.2bn to a consortium comprising Canada's Intact Financial Corp and Tryg A/S of Denmark.
The consortium has proposed paying 685p a share in cash for the FTSE 100 insurer. RSA would pay its proposed interim dividend of 8p a share.
RSA shares closed at 670p on Thursday after jumping from about 453p in late trading as speculation emerged about a deal. RSA, run by Stephen Hester, confirmed it was in talks in a statement after the market closed on Thursday and said its board was minded to recommend the proposal.
Under the terms of the proposal Intact would pay £3bn and Tryg would pay £4.2bn. Intact would buy RSA's Canada, UK and international operations and Tryg would take over the company's businesses in Sweden and Norway. The buyers would own RSA's Denmark operations.
RSA, formerly known as Royal & Sun Alliance, owns the More Than insurance brand. The 314-year-old company has insured names such as the explorer James Cook and Charles Darwin, who developed the theory of evolution. RSA has been the subject of takeover speculation on and off for several years.
The company's shares fell 1.9% to 657p at 09:40 GMT, suggesting investors do not expect a counter-offer to emerge.
William Ryder, an equity analyst at Hargreaves Lansdown, said: "The offer represents a substantial premium to RSA's closing share price on 4 November and a more marginal premium to the pre-Covid price. The offer seems more than reasonable to us, although investors will be hoping another bidder comes in to jack up the price.
"Investors that thought RSA was undervalued may feel the suitors are taking advantage of low prices caused by the pandemic, but at the very least potential returns have been brought forward."
Under the Takeover Code the consortium has until 3 December to announce a firm intention to make an offer for RSA. RSA said there was no certainty an offer would be made.
The consortium has proposed paying 685p a share in cash for the FTSE 100 insurer. RSA would pay its proposed interim dividend of 8p a share.
RSA shares closed at 670p on Thursday after jumping from about 453p in late trading as speculation emerged about a deal. RSA, run by Stephen Hester, confirmed it was in talks in a statement after the market closed on Thursday and said its board was minded to recommend the proposal.
Under the terms of the proposal Intact would pay £3bn and Tryg would pay £4.2bn. Intact would buy RSA's Canada, UK and international operations and Tryg would take over the company's businesses in Sweden and Norway. The buyers would own RSA's Denmark operations.
RSA, formerly known as Royal & Sun Alliance, owns the More Than insurance brand. The 314-year-old company has insured names such as the explorer James Cook and Charles Darwin, who developed the theory of evolution. RSA has been the subject of takeover speculation on and off for several years.
The company's shares fell 1.9% to 657p at 09:40 GMT, suggesting investors do not expect a counter-offer to emerge.
William Ryder, an equity analyst at Hargreaves Lansdown, said: "The offer represents a substantial premium to RSA's closing share price on 4 November and a more marginal premium to the pre-Covid price. The offer seems more than reasonable to us, although investors will be hoping another bidder comes in to jack up the price.
"Investors that thought RSA was undervalued may feel the suitors are taking advantage of low prices caused by the pandemic, but at the very least potential returns have been brought forward."
Under the Takeover Code the consortium has until 3 December to announce a firm intention to make an offer for RSA. RSA said there was no certainty an offer would be made.