As we were finalising the latest Trend Tracker report, it emerged that RSA, which has long been seen as a takeover target – most recently linked with Aviva – had confirmed it was in talks to sell itself to a consortium for £7.2 billion (Tryg will pay £4.2 billion of the purchase price and Intact will pay £3 billion). RSA had received the proposed offer on 2 October and has entered discussions with the bidders in a deal that would break-up the 300-year-old group.
The interested parties are two groups, Canada’s Intact Financial Corporation and Denmark’s Tryg, who have proposed paying 685p per share for the UK insurer a statement said.
An RSA statement said, “The board of RSA has indicated to the consortium that it would be minded to recommend the proposal, subject to satisfactory resolution of the other terms of the possible offer, including a period of due diligence.”
The deal was subsequently confirmed on 18 November, meaning that RSA is the latest UK insurer to be bought by an overseas rival, with Hastings accepting a £1.66 billion bid in August and Germany’s Allianz acquiring the general insurance businesses from LV= and Legal & General.
Under the terms of the deal, Intact will keep RSA’s UK, Canadian and international operations, while Tryg will take on the Swedish and Norwegian businesses, and they will both co-own the Danish arm.
Charles Brindamour, chief executive of Intact, said: “Acquiring RSA’s strong businesses will expand our leadership position in Canada, build on our expertise in specialty lines and provide a substantial opportunity to build on the UK and international operations.”
The sale of the company, which owns More Than and underwrites home and pet insurance for the likes of Tesco and John Lewis, stands to net chief executive Stephen Hester up to £15.8 million.
The 59-year-old will benefit from a windfall by selling shares he owns outright and others he could get through bonus schemes, which he has collected in nearly seven years at the firm.
But this is a fraction of the amount which Hargreaves Lansdown (HL) co-founder Stephen Lansdown pocketed as a result of the deal, when he offloaded a stake in the investment platform he helped to build.
The now-retired entrepreneur sold £103 million worth of shares through his firm PHL Limited, taking his holding in HL from 7.1% to 5.7%.
Lansdown, 68, has an estimated fortune of £1.35 billion after co-founding the platform back in 1981 with his business partner Peter Hargreaves.
RSA was founded more than 300 years ago in the aftermath of the Great Fire of London. When it listed on the stock market in 1983, it was worth just £451 million, but is now on the FTSE 100 index.
It employs around 14,000 people and has more than 9 million customers across 100 countries. It is the 10th largest motor insurer in the UK.