- Zurich has lifted its offer to 1,335p per share, valuing Beazley at about £8bn.
- The bid represents nearly a 60 per cent premium to the pre-offer share price.
- Analysts warn more London-listed insurers could become takeover targets.
One of Britain’s largest insurers is poised to leave the London stock market after agreeing in principle to an £8bn takeover by Swiss rival Zurich, in a move that is likely to intensify debate over the City’s shrinking public market.
Beazley, which employs around 2,500 people, said it had reached an “agreement in principle” with Zurich following a revised offer. The Swiss insurer raised its bid from 1,280p per share, previously valuing the company at £7.7bn, to 1,335p per share in cash and dividends.
The latest proposal represents nearly a 60 per cent premium to Beazley’s closing price before Zurich’s interest became public. The board said it was “minded to recommend” the improved terms should a firm offer be made, as quoted in a news report.
Another name disappears from the board
If completed, the deal would mark the latest departure of a major London-listed company. Analysts have frequently pointed to relatively low UK market valuations as leaving firms vulnerable to overseas buyers.
Zurich’s revised offer remains below the £8.4bn valuation attached to a proposal it made in June last year. Beazley shares surged 42 per cent after the initial approach was disclosed last month. Despite that jump, shares were still trading below the 1,335p offer price at 1,160p on Tuesday, before rising 9 per cent in early Wednesday trading.
The combined group would generate around $15bn (£10.9bn) in annual sales, creating one of the larger players in the global insurance market. Questions are likely to be raised over potential job overlaps, although no details have been confirmed.
Zurich, led by chief executive Mario Greco, employs around 4,500 people in the UK and paid more than £1bn in UK taxes last year.
Could others be next?
Some analysts believe the deal may trigger further consolidation. RBC Capital Markets suggested other insurers could become takeover targets. Analyst Ben Cohen reportedly identified Hiscox and Lancashire as potential candidates, adding that Hiscox may carry a higher probability due to the strategic importance of its retail operations, as quoted in a news report.
Beazley chief executive Adrian Cox said last month that a tie-up with Zurich would create a “powerful engine” in the insurance sector, according to reports.
Founded in 1986 as a Lloyd’s syndicate by Andrew Beazley and Nick Furlonge, the company built its reputation on specialist insurance, covering everything from rare stamp collections to classic cars. It floated on the London Stock Exchange in 2002 and joined the FTSE 100 four years ago.
The proposed takeover now places Beazley among a growing list of companies exiting the City. Whether it signals another wave of foreign bids for UK insurers may become clearer in the months ahead.
