The move’s been expected for a while, but now it’s official: Zurich has made a provisional $8.8-billion takeover bid for its insurance rival RSA, which would mean one of the biggest insurance deals for both Europe and North America.
RSA’s shares jumped 4.8 percent in London to 518.5 pence just before 10 in the morning, UK time — that’s short of Zurich’s proposal of 550 pence a share.
Zurich received a 28-day extension to either make a firm offer, walk away or ask for more time to consider the deal. “We have asked for an extension because we want to have a better insight on RSA,” Riccardo Moretto, a Zurich spokesperson, told CI Top Broker. ”The information we have so far [is] only viewed from public sources. So what we want to have now is more detailed information on the company and that’s why we are doing an additional due diligence process.”
Until the new deadline of September 22, Zurich will look into RSA’s insurance portfolio, liabilities, capital strengths and other confidential information to “see if we are still convinced that the offer of 550 pence per share is okay or if we have to fix some terms.” It is too early, says Moretto, to comment on how the merger would affect Canadian operations.
RSA’s pension deficit of 3.1 billion pounds at the end of last year may be the largest obstacle but Moretto points out the company’s transparent disclosure on the subject “is among the best in the insurance sector.” Zurich will further analyze the deficit in the due diligence process.
This huge deal comes in the wake of several insurance mergers, with more expected in Europe and the U.S. Analysts chalk up various reasons: tighter capital regulations expected to come in force for Europe in January, strong competition in the insurance sector and low investment returns.
The deal is considered similar in size to Aviva’s agreed takeover this year of UK’s Friends Life and would be larger than Exor’s $7-billion purchase of Partner Re.
Zurich has said publicly it would not overpay and is looking for a return on any investment in RSA of at least 10 percent.
from Canadian Insurance » Your Business http://ift.tt/1MTIkk2
UPDATE: Zurich puts in provisional $8.8 billion bid for rival RSA http://ift.tt/1MTIkk2 http://ift.tt/1GjoY4g http://ift.tt/1EdKSDq http://ift.tt/1yQVVxa http://ift.tt/1IfZgsM angel.co/rtb1923 #latenighthashtags http://ift.tt/1pPZC1m
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