* 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 4%
(New throughout, adds Canadian pension funds' contributions,
updates share prices)
By Iain Withers and Carolyn Cohn
LONDON, Nov 18 (Reuters) - Canada's Intact Financial
and Denmark's Tryg on Wednesday said they
had reached an agreement to buy British insurance group RSA
for 7.2 billion pounds ($9.6 billion) in cash in one of
Europe's biggest financial takeovers 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.
The deal "represents an excellent outcome for all of our
constituencies", Hester said.
The former NatWest boss, who has shored up RSA's
balance sheet with a 773 million pound rights issue and scaled
back underperforming operations since joining in 2014, 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. 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.
Intact CEO Charles Brindamour told reporters his company
would invest in RSA's UK operations and that job losses in the
UK and Canada would be capped at 2%.
His Tryg counterpart Morten Hubbe also told reporters job
losses in Scandinavia would be relatively low, describing RSA's
businesses there as "high quality".
UK INVESTMENT
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.
Canadian pension funds Caisse de dépôt et placement du
Québec, Canada Pension Plan Investment Board and Ontario
Teachers' Pension Plan Board will contribute C$1.5 billion,
C$1.2 billion and C$500 million respectively to Intact's
payment, the company said in a statement https://www.newswire.ca/news-releases/intact-financial-corporation-announces-agreement-with-cornerstone-investors-to-finance-a-portion-of-the-purchase-price-of-the-possible-offer-for-rsa-insurance-group-plc-rsa--865615261.html
last week.
KBW analysts called the deal "transformational" for Tryg.
Activist investor Cevian Capital, RSA's largest shareholder
with a 14.9% stake, said it fully supports the takeover.
Industry sources said RSA had been seeking a buyer since a
5.6 billion pound bid from Zurich Insurance collapsed
in 2015. Any buyer of the UK business also needed to win over
the trustees of its UK pension schemes, they said.
Intact will put extra cash into those schemes, RSA's
statement said.
The appetite for insurance deals has been growing. In August
motor insurer Hastings agreed to be bought by Finland's
Sampo and South Africa's Rand Merchant Investment
.
Intact shares rose 0.6% to C$676.80 in afternoon trading in
Toronto. RSA shares closed up 4.7% in London, while Tryg ended
the day down 5.1% in Copenhagen.
Morgan Stanley advised Tryg and Barclays
advised Intact. Goldman Sachs, Robey Warshaw and BofA
Securities advised RSA.
($1 = 0.7539 pounds)
($1 = 1.3071 Canadian dollars)
(Additional reporting by Nikolaj Skydsgaard in Copenhagen and
Nichola Saminather in Toronto
Editing by Sinead Cruise and David Goodman)
Barclays (BARC)
Natwest (NWG)
