(Alliance News) - Intact Financial Corp on Friday said it has reached an agreement with CIBC Capital Markets and Barclays Capital Canada Inc to fund a further CAD1.25 billion, about USD953 million, of its offer for RSA Insurance Group PLC.
London-headquartered general insurer RSA confirmed in early November that Canadian insurer Intact Financial and Danish insurer Tryg AS had made a proposal to buy the FTSE 100-listed firm and divide it up between them.
The board of RSA, last Friday, backed the two-headed consortium's GBP7.2 billion takeover proposal. It said 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.
On Friday, Intact said it has entered into subscription agreements with a group of underwriters, led by CIBC and Barclays Canada, for a total issue of 9.3 million shares at CAD134.50 each, raising CAD1.25 billion.
Shares in Intact closed at CAD138.93 each in Toronto on Thursday.
Friday's deal follows, Intact striking a similar agreement on Thursday with subsidiaries of each of Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan Board for a total issue of 23.8 million subscription receipts at a price of CAD134.50 per subscription receipt, raising gross proceeds of CAD3.2 billion.
The two subscription deals will raise gross proceeds of CAD4.45 billion, roughly GBP2.57 billion, which will cover the majority of Intact's portion of the RSA deal. Intact has previously stated it would fund the deal by making an equity private placement, plus debt and preference share issues.
Completion of both offerings is conditional upon the consortium announcing a firm offer for RSA, Intact noted. The consortium has until December 3 to make a firm offer.
Shares in RSA Insurance were 0.8% higher in London on Friday at 655.80 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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