November 27th, 2020

UK insurance firm RSA agrees to US$9.4B takeover offer from Intact and Tryg


By The Associated Press on November 18, 2020.

LONDON – RSA Insurance, one of the U.K.’s oldest insurance companies, agreed Wednesday to a takeover by Canadian and Danish buyers in a cash deal that values it at 7.2 billion pounds (US$9.4 billion).

Canada’s Intact Financial Corp. and Denmark’s Tryg said their offer of 685 pence per share represents a 51 per cent premium on RSA’s share price on Nov. 4, the day before the announcement of a possible offer.

Intact CEO Charles Brindamour called the acquisition highly strategic.

“It expands our leadership position in Canada, builds on our strong track record in specialty lines, and puts us in a solid position to strengthen RSA’s UK and Ireland operations,” Brindamour said in a statement.

“We have strong capabilities in data, risk-selection and claims management, which we plan to leverage across the business.”

Under the terms of the deal, Tryg will pay 4.2 billion pounds to take over RSA’s Swedish and Norwegian businesses, while Intact will pay 3 billion to buy RSA’s operations in Canada, the U.K., Ireland and other international locations. The two companies will co-own RSA’s Danish business.

The deal needs to be approved by shareholders.

Tryg said it was likely to cut between 10 per cent and 15 pe cent of staff in the combined businesses across Norway and Sweden in the first three years following the acquisition.

Intact said the deal will lead to some job cuts in RSA’s global head office functions but did not provide more detail. It said it would confirm the impact to affected staff within 120 days of the deal’s completion.

To help finance its purchase, Intact has signed deals with some of Canada’s largest pension plans.

The company announced last week agreements with the Caisse de depot et placement du Quebec, the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan Board for subscription receipts that will become Intact shares once the deal closes.

CDPQ will invest $1.5 billion while CPP Investments will contribute $1.2 billion. Ontario Teachers’ will invest $500 million.

Intact has also signed a deal to raise an additional $1.25 billion in a bought deal private placement of subscription receipts with a group of underwriters, led by CIBC Capital Markets and Barclays Capital Canada Inc.

RSA employs around 13,500 people worldwide and has about nine million customers across more than 100 countries.

Founded more than 305 years ago, RSA is one of the world’s longest-standing general insurers. Its brands, including More Than, offer personal insurance for home, car, pet and travel. The company also has a commercial insurance arm.

“RSA has provided peace of mind to individuals and protected businesses from risk for more than 300 years,” said RSA chairman Martin Scicluna.

“I am confident that the values of our business, and not least our dedication to serving customers well, will be sustained as part of Intact and Tryg.”

– With files from The Canadian Press

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