Shares in insurance group RSA surged by nearly 50% last week after it was revealed that Canadian insurer Intact Financial and its Danish counterpart Tryg have jointly approached it about a possible takeover, says the BBC. Valuing RSA at £7.2bn, the deal would be “the biggest takeover of a UK-listed company so far this year”. It would see RSA’s operations split up, with Intact keeping the Canada and UK divisions, and Tryg taking control of RSA’s Sweden and Norway units. The two firms have until 3 December to make a formal offer.
No wonder RSA’s shareholders have reacted “ecstatically”, says Ian King on Sky News. RSA is “not a company that will be greatly missed”. Thanks to unwise acquisitions and poor cost control, it has become notorious for missing profit expectations over the past two decades. While the current CEO Stephen Hester is regarded as “having done a good job”, even he “has never really succeeded” in persuading investors that RSA can deliver “above-average returns”.
Shareholders are unlikely to get a better offer, says Chris Hughes on Bloomberg. While RSA “has long been talked of as a bid target”, few potential buyers will want its “unusual bundle” of UK, Scandinavian and Canadian assets. Some, such as rival Aviva, are not only looking to conserve capital, but will be loath to enter a public auction against a consortium with “plausible synergy potential” when the starting price is “already high”. RSA shareholders would be wise to “dot the i’s and extract a binding offer here”.
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