(Bloomberg) -- RSA Insurance Group Plc rose in London trading after Switzerland’s Zurich Insurance Group AG proposed to buy the company for about 5.6 billion pounds ($8.8 billion).
The shares increased 5.1 percent to 520 pence at 9:11 a.m., short of Zurich’s conditional offer of 550 pence a share. RSA will relay the bid to shareholders provided satisfactory terms are met, including due diligence, it said in a statement from London on Tuesday. U.K. regulators have given Zurich until Sept. 22 to make a firm offer.
The decision ends a month of speculation about whether Zurich Insurance Chief Executive Officer Martin Senn would bid for the company and comes on the day of a deadline to submit an offer. The possible takeover, which would be the biggest in Europe this year, has spurred speculation that buyouts in the European insurance industry, which have lagged behind those in the U.S., are about to gain momentum.
“We think this is a reasonable price,” said Ming Zhu, an analyst at Canaccord Genuity in London. “RSA made some strong progress in the first half of 2015. That provides some comfort to Zurich shareholders.”
The two firms had differed on price, with RSA demanding 600 pence a share and Zurich offering about 525 pence, according to reports in the U.K. press including the Sunday Telegraph.
Zurich’s purchase of RSA, its biggest since 2000, would allow it to expand in the U.K. and Latin America as well as access RSA’s profitable Scandinavian and Canadian units at a time when its own profit is in decline.
For RSA, the talks are capping a tumultuous two-year period which included an accounting scandal in Ireland, Simon Lee’s departure as CEO and a spate of asset disposals to shore up the balance sheet. Stephen Hester, the former CEO of Royal Bank of Scotland Group Plc, took the reins last year.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
