(Alliance News) - RSA Insurance's board has backed a GBP7.2 billion takeover proposal from a two-headed consortium that would see the company split up geographically.
RSA on Thursday confirmed Canadian insurer Intact Financial and Scandinavian insurer Tryg have made a proposal to buy the FTSE 100-listed firm and divide it up between them.
Intact would pay GBP3.0 billion and take RSA's Canada and UK & International business, while Tryg would pay GBP4.2 billion and take the Sweden and Norway operations. The pair would co-own RSA's business in Denmark.
The proposal, RSA said, comprises 685 pence in cash per RSA share, plus payment by RSA of the announced interim dividend of eight pence per share. RSA closed at 670.00p on Thursday, jumping in the final minutes of trading from its quote of 452.60p just 10 minutes prior to the close.
RSA shares were down 1.3% early Friday at 661.00p.
"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 proposal, including a period of due diligence which is currently underway by the consortium," RSA said.
It cautioned, though, that there is no certainty that a formal offer will be made.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 5,913.34
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Hang Seng: up 0.1% at 25,712.97
Nikkei 225: closed up 0.9% at 24,325.23
DJIA: closed up 542.52 points, or 2.0%, at 28,390.18
S&P 500: closed up 2.0% at 3,510.45
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GBP: up at USD1.3139 (USD1.3097)
EUR: up at USD1.1839 (USD1.1820)
Gold: firm at USD1,947.11 per ounce (USD1,946.20)
Oil (Brent): down at USD40.42 a barrel (USD40.87)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
0830 GMT UK Halifax house price index
0830 EST US monthly jobs report, including nonfarm payrolls
1000 EST US monthly wholesale trade
1500 EST US consumer credit
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US President Donald Trump has again moved to undermine confidence in the US election, making unsupported accusations from the White House about the integrity of the results in his race against Democrat Joe Biden while votes were still being counted across the country. Hours earlier, Biden offered reassurances that the counting could be trusted, projecting a more presidential appearance while urging patience from Americans. The candidates' sharply contrasting postures intensified a national moment of uncertainty as the nation and the world waited to learn which man would collect the 270 electoral votes needed to capture the presidency. Trump has pursued legal options with little success, working the phones and escalating efforts to sow doubt about the outcome of the race. With his path to victory narrow, Trump pushed unsupported allegations of electoral misconduct in a series of tweets, and insisted the ongoing vote count of ballots submitted before and on Election Day must cease. He was back on Twitter in the early hours of the morning, insisting the "US Supreme Court should decide!".
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Denmark has been removed from the UK government's list of travel corridors due to widespread outbreaks of Covid-19 in its mink farms, the Transport Secretary said. Travellers arriving in the UK from the country after 4am on Friday must self-isolate for 14 days. Denmark was only added to the quarantine-free list on October 25. The move comes just hours after Germany and Sweden were removed from the list, with people travelling to the UK from those destinations to quarantine for two weeks if they arrive after 4am on Saturday.
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Japan's average household spending dropped 10% year-on-year in September for the 12th straight month of fall due to the coronavirus pandemic and a consumption tax hike last year, the government said. The reading was almost in line with the median forecast of a 10.6% decline by analysts surveyed by the Nikkei Business Daily, following a 6.9% fall in August. The pandemic has made many people spend far less on transportation and kept them from going to work and dining out. Household spending has never climbed since the government raised the nation's consumption tax to 10% from 8% in October.
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BROKER RATING CHANGES
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RBC RAISES RECKITT BENCKISER TO 'SECTOR PERFORM' (UNDERPERFORM) - PRICE TARGET 6,700 (6,400) PENCE
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BERENBERG RESUMES RWS HOLDINGS PLC WITH 'BUY' - TARGET 810 PENCE
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MORGAN STANLEY RESUMES HAMMERSON WITH 'EQUAL-WEIGHT'
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LIBERUM RESUMES STAFFLINE WITH 'BUY' - TARGET 40 PENCE
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COMPANIES - FTSE 100
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AVEVA said it is making progress with its takeover of data management software firm OSIsoft and proposed a GBP2.84 billion rights issue to partly fund the USD5.0 billion deal. RSA Insurance backed a consortium's takeover and split-up of the company. Fellow insurer Beazley reported third-quarter progress. Budget carrier easyJet cut capacity again due to the latest Covid-19 restrictions. Software firm AVEVA said it plans to raise GBP2.84 billion in a seven for nine rights issue, which has been backed by 60% shareholder Schneider Electric. The rights issue price is GBP22.55, AVEVA noted. Its stock closed at GBP41.62 on Thursday. On the OSIsoft takeover, AVEVA said: "Regulatory and antitrust approvals are on track. AVEVA has already received antitrust approvals in several countries and expects to receive all antitrust and regulatory approvals in relation to the acquisition (including approval from the Committee on Foreign Investment in the United States) between December 2020 and February 2021."
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COMPANIES - FTSE 250
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easyJet said it now plans to fly "no more than 20%" of its planned capacity for the first quarter of financial 2021. Demand for travel has been hit by Covid-19 and subsequent government restrictions across the globe. The carrier said the capacity cut is due to the latest lockdown in England and "similar announcements in Germany and France". easyJet also announced the sale and leaseback of 11 aircraft, netting the carrier USD169.5 million. On Thursday, the UK government removed Germany and Sweden from its quarantine-free list, forcing people travelling to the UK from those destinations to quarantine for two weeks if they arrive after 4am on Saturday. Germany's seven-day rate of coronavirus cases per 100,000 people reached 140 after nearly 20,000 cases were reported on Wednesday. The rate for Sweden is 190 with the UK's own at 235. The UK government later removed Denmark as well from the air bridge list.
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Insurer Beazley posted a rise in gross premiums written after its third quarter of trading. In the nine months ended September 30, gross written premiums surged 16% year-on-year to USD2.53 billion. Beazley said it has seen growth in almost all of its divisions. Looking ahead, Beazley said Covid-19 related claims may climb by USD50 million should there not be a return to "some form of normality" in the second half of 2021. Back in September, it said its claims estimate for Covid-19 was USD340 million net of reinsurance, which it kept in place on Thursday. Beazley said it expects third-quarter catastrophe claims to be USD80 million net of reinsurance.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Historic bakery brand Hovis has been bought by a UK private equity firm after a significant turnaround over the past four years, PA reports. The 134-year-old business has been bought by Endless LLP from joint venture owners Gores Group and Mr Kipling-owner Premier Foods for an undisclosed sum. Premier Foods said it will receive GBP37 million in proceeds from the deal, which was closed late on Thursday evening. Endless, which has previously owned The West Cornwall Pasty Co and pork giant Karro Foods, said it will pump "significant investment" into Hovis to help its current management achieve their future plans.
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COMPANIES - GLOBAL
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Toyota almost doubled its full-year forecasts, saying sales and production were recovering quickly from the coronavirus pandemic, which has shredded the global auto market this year. Japan's top car maker now projects net profit of JPY1.42 trillion - around USD137 billion - for the fiscal year to March 2021, up from an earlier estimate of JPY730 billion. It said full-year sales are now expected to hit JPY26 trillion, against a previous estimate of JPY24 trillion. Results for the first half appeared sluggish compared with the previous year, with net profit down 45% at JPY629.4 billion. But the signs of recovery were clear in the second quarter, with bottom-line profit at JPY470.5 billion against JPY158.8 billion in the previous quarter, when the pandemic was hitting hard.
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Allianz posted a rise in net income for the third quarter of 2020 as it stated it has decided to discontinue its previously-suspended share buyback programme. The Munich, Germany-based financial services company said net income for the three months ended September 30 was EUR2.13 billion, up 4.9% from EUR2.03 billion the year prior. While revenue fell 6.1% to EUR31.4 billion from EUR33.4 billion, operating profit fell only 2.6% to EUR2.9 billion. Allianz noted that operating profit in its Life/Health business segment increased 3.4% to EUR1.12 billion, supported by an improved investment margin. In the Property-Casualty business segment, operating profit fell 2.4% to EUR1.32 billion due to Covid-19-related losses and a lower contribution from run-off. Its Asset Management business segment's operating profit decreased 3.7% to EUR667 million.
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Friday's Shareholder Meetings
Redrow PLC - AGM
Adriatic Metals PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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