UK’s oldest insurer RSA (RSA.L) is in talks with two foreign firms over a £7.2bn ($9.5bn) joint-takeover deal, which could see it broken up.
Under the offer the companies would pay 685p in cash per RSA share or £6.9bn, while investors would also receive an already announced £83m (8p per share) dividend.
The insurance group has big operations in Canada, Ireland and Scandinavia. It employs 13,500 people across more than 100 countries.
An agreement would result in RSA’s overseas business being split apart with Intact taking control of its UK, Canadian and other international operations.
If successful, Tryg would take over RSA’s Sweden and Norway business, while both consortiums would co-own RSA’s Denmark business.
If it goes ahead it will be the biggest takeover of a UK-listed company so far this year.
The news saw shares in the FTSE 100 (FTSE^) company surge 46% to 670p late on Thursday.
A breakup would see Tryg take on the highest bill paying RSA about £4.2bn, while Intact would contribute £3bn. The two insurers have until 3 December to make a formal offer.
The company has long been seen as a takeover target and came close to a sale to Switzerland's Zurich Insurance in 2015.
RSA was formed in 1996, through the merger of Sun Alliance with Royal Insurance.
But, the company’s roots go back 300 years, when the original Sun Fire Office in London — the oldest documented insurer — was founded in 1710. While Royal Insurance was established in Liverpool in 1845.
It is now a leading company selling home, car and commercial cover.
A deal would also likely lead to a multimillion-pound windfall for Stephen Hester, RSA’s chief executive, who owns shares in the firm. Hester, who took over in 2014 has pushed through a turnaround at the company, when it was hit by a string of profit warnings and an accounting scandal at its Irish business.
He was CEO at The Royal Bank of Scotland, where he rose to prominence before the Treasury ousted him from the taxpayer-controlled bank.
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