Lloyd’s of London’s Beazley again rejects Zurich’s £7.7bn takeover bid
Beazley, the prominent Lloyd’s of London underwriter, has unanimously rejected a 1,280p per share cash proposal from Zurich Insurance Group, which it says “materially undervalues” the firm’s future prospects.
The board noted that this latest offer is actually lower than a 1,315p proposal Zurich made in June last year, which valued the firm at approximately £8.4bn.
Zurich privately submitted a proposal to the Beazley board at the start of January to acquire 100 per cent of the company at 1.230 pence per share in cash. However, that bid was also rejected as it “significantly undervalues” the business.
Zurich currently holds a 1.465 per cent stake in Beazley, representing 8,784,065 ordinary shares.
On Monday, Zurich reiterated its offer – this time in public – of 1.280 pence per share (all-cash), valuing the FTSE 100 group at about £7.7bn.
In a response on Thursday morning, Beazley emphasised its “uniquely positioned” status in the speciality insurance market, citing a total shareholder return of 2,200 per cent over the last 20 years.
The board also pointed to its leading position in the cyber insurance market and the recent establishment of a Bermuda-based insurer as key drivers for independent growth.
Speaking earlier this week, when it submitted its reiterated offer, Zurich said it “is a disciplined acquirer with a strong focus on returns, and believes the transaction would deliver attractive returns for both Zurich’s and Beazley’s shareholders”.
Beazley has advised its shareholders to “take no action” at this time, ahead of its full-year results set to be released on 4 March.
In reaction to the news, a Jefferies note believes “a deal is still possible”.
“We think Zurich can afford better terms, but only up to an additional 10 per cent, from 1,280p. A 3 per cent uplift to 1,315p sits comfortably within this. Perhaps we’re reading too much into it, but the
shift in Beazley’s language from a “significant” to “material” undervaluation could be read as a softening.”