The board of the FTSE 100 insurer said it would be minded to recommend the proposal from Canada’s Intact Financial Corporation and Danish peer Tryg if it leads to an offer being made, subject to a period of due diligence that is currently underway.
Intact and Tryg have proposed to offer a combined 685p in cash per RSA share, plus payment by RSA of its already-announced interim dividend of 8p per share.
RSA would then be broken in two, with Tryg paying £4.2bn for RSA’s Sweden and Norway operations, Intact getting the UK, Canadian and some other international business, and the Danish operations being co-owned by the Tryg and Intact.
RSA, which owns the More Than and Motability insurance brands, said that it received the first proposal from the consortium on October 2, 2020.
The consortium has until 5pm on December 3 to either make a firm offer or walk away.
Even before the RSA put out an initial statement on the proposed offer after London trading had closed on Thursday, the shares had shot up from 452p to 670p, roughly where they were in the summer of 2018.
On Friday, the shares dipped 1% to 662.2p.
Analysts at broker Peel Hunt said the strategic rationale for Intact to buy RSA’s Canadian business “is obvious, as well as Tryg’s interest in Scandinavia”.
“The UK operations will be acquired by Intact and it will be interesting to hear what its long-term strategic plans are in the UK.
“We believe this is a full offer that has a high likelihood of success, but we cannot rule out that a third party gets involved as well.”
–Adds share price and broker comment–