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* RSA chief executive to step down after deal
* Tryg would take Swedish and Norwegian businesses
* Intact to gain Canadian, UK and international operations
* Buyers would co-own RSA's Danish business
* RSA shares up 4%, Tryg down 1.7%
(Adds RSA chief executive comments)
By Iain Withers and Carolyn Cohn
LONDON, Nov 18 (Reuters) - British insurance group RSA
is backing a 7.2 billion pound ($9.55 billion) cash
offer from Canada's Intact Financial and Denmark's Tryg
in one of Europe's biggest financial takeover bids
this year.
Insurers have become an attractive proposition since the
coronavirus crisis despite reputational damage from disputes
over business interruption claims, industry sources say.
Home-working has led to fewer claims on home and motor insurance
while commercial insurance rates have risen sharply.
RSA's directors backed the Intact-Tryg bid unanimously and
recommended shareholders vote in favour of the consortium's
offer, the company said on Wednesday, having first flagged the
approach early this month.
Best known in Britain for its More Than brand, RSA provides
home, motor and commercial insurance and also has large
operations in Canada, Ireland and Scandinavia.
RSA Chief Executive Stephen Hester told reporters he planned
to step down after the deal's completion, adding that he expects
a small number of job losses at the group's UK headquarters and
in Canada and Scandinavia as those businesses are integrated.
"RSA has been transformed over the last six years," Hester
said, adding that the deal "represents an excellent outcome for
all of our constituencies".
The former NatWest boss said he expects the deal to
complete in the second quarter of 2021 but has no plans for the
future as yet.
The proposed takeover would result in the break-up of the
British group, with suitors carving it up between them. Intact
would gain RSA's Canada, UK and international operations while
Tryg would take the Sweden and Norway businesses. The pair would
co-own RSA's Danish unit.
Tryg would pay 4.2 billion pounds while Intact would
contribute 3 billion pounds, with the overall offer representing
a 51% premium to RSA's Nov. 4 closing share price of 460 pence.
CEVIAN SUPPORT
“Our deep knowledge of these markets makes us ideally placed
to integrate, operate and enhance the value of our combined
group,” Tryg CEO Morten Hubbe said in a statement.
KBW analysts described the deal as "transformational" for
Tryg.
Activist investor Cevian Capital, RSA's largest
shareholder, said it fully supports the takeover.
"We assess that the long-term competitiveness of RSA's
business will benefit from combining with Tryg and Intact, the
best-performing non-life companies in their respective
geographies," said Christer Gardell, co-founder of Cevian, which
owns a 14.9% stake in RSA.
Gardell added that Hester had put RSA on a better footing.
Since joining in 2014, Hester has shored up the balance sheet
with a 773 million pound rights issue and scaled back
underperforming operations.
Industry sources said RSA had been seeking a buyer since a
5.6 billion pound bid from Zurich Insurance collapsed
in 2015.
However, the appetite for deals has been growing across the
sector. In August motor insurer Hastings agreed to be
bought by Finland's Sampo and South Africa's Rand
Merchant Investment.
RSA shares rose 3.8% by 0946 GMT, while Tryg dipped by 1.7%.
Morgan Stanley advised Tryg and Barclays
advised Intact and the joint bidding company. Goldman Sachs
, Robey Warshaw and BofA Securities advised RSA.
($1 = 0.7539 pounds)
(Additional reporting by Nikolaj Skydsgaard in Copenhagen
Editing by Sinead Cruise and David Goodman)
