(Reuters) – The British insurance group RSA supports a cash offer of 7.5 billion pounds (9.55 billion dollars) from Canada's Intact Financial and Danmarks Tryg in one of Europe's largest financial takeover bids this year.
Insurance companies have become an attractive proposition since the coronavirus crisis despite rumored damage from disputes over business interruption claims, industry sources say. Home work has led to fewer claims on home and car insurance, while commercial insurance rates have risen sharply.
RSA board members unanimously supported the Intact-Tryg bid and recommended shareholders to vote for the consortium's offer, the company said Wednesday after first flagging the approach earlier this month.
RSA is best known in the UK for its More Than brand and offers home, car and commercial insurance and also has major operations in Canada, Ireland and Scandinavia. he planned to resign after the deal was completed, adding that he expects a small number of job losses at the group's headquarters in the uk and in canada and scandinavia as these companies are integrated.
The deal "represents an excellent result for all our constituencies," said Hester.
The former NatWest chief, who has strengthened RSA's balance sheet with a rights issue of £ 773 million and reduced underperformance ns since joining in 201
Tryg would pay £ 4.2 billion, while Intact would contribute £ 3 billion, with the total offer corresponding to a 51% premium to RSA's November 4 closing price of 460 pence.
Intact CEO Charles Brindamour told reporters that his company would invest in RSA's UK operations and that the number of job losses in the UK and Canada would be limited to 2%.
His Tryg counterpart Morten Hubbe also told journalists that job losses in Scandinavia would be relatively low and described RSA's companies there as "high quality."
KBW analysts called the deal "transforming" for Tryg. 14.9% of the shares said that they fully support the takeover.
Industry sources said the RSA had been looking for a buyer since a £ 5.6 billion bid from Zurich Insurance collapsed in 2015. All buyers of the UK business also needed to win over the managers of its UK pension system, they said.
Intact will spend extra money on these systems, the RSA said in a statement.
The desire for insurance contracts has increased. In August, the car insurer Hastings agreed to be bought by Finland's Sampo and South Africa's Rand Merchant Investment.
RSA shares rose 4.1% before 12:57 GMT, but Tryg fell 3.9%.
Morgan Stanley advised Tryg and Barclays recommended Intact. Goldman Sachs, Robey Warshaw and BofA Securities advised RSA. Catalog