British insurer Aviva failed to see off bid speculation despite rejecting a £5 billion offer from rival RSA that analysts and shareholders said might add up.
"We think such a deal could make strategic sense. There would be significant overlap in the UK, Ireland and Canada and where RSA would have market-leading positions," UBS said in a research note.
Aviva, Britain's second-biggest life insurer by market capitalisation, confirmed today that it had rejected an approach from RSA to buy its main general insurance businesses in the UK, Ireland and Canada for £5 billion in cash.
Aviva said it received the conditional proposal on July 28th and told RSA on August 6th that it felt the offer was unacceptable.
"Given the compelling strategic and financial benefits to Aviva shareholders of retaining the GI Business, its upside potential and the terms offered by RSA, the board was unanimous in rejecting this proposal," Aviva chairman Colin Sharman said.
Aviva also pointed out that its recent interim results, when it posted a 21 per cent rise in half-year operating profits, showed that the company was in good shape. , Deutsche Bank and HSBC.
Its bid overtures to Aviva are the latest consolidation attempt in the world's insurance industry, following British insurer Prudential's botched $35.5 billion bid for AIG's Asian unit AIA this year.
Prudential was forced in June to pull its bid for AIA, a deal that would have ranked as the insurance sector's biggest takeover, after shareholders balked at the price tag and AIA's US parent AIG rejected a lower offer.
A spokesman for RSA declined to comment on whether RSA would be prepared to come back with a higher offer for the Aviva businesses, but one major Aviva shareholder said there were potential synergies in a tie-up between the two companies.
The investor, who asked not to be named, made the comment to Reuters yesterday following media reports that investors were unhappy after Aviva rejected the bid without consulting them.
"We felt there were potential synergies in a deal of that nature," the shareholder said, without commenting further.
The Sunday Times said some leading shareholders would seek a strategic review of Aviva which could include calls for a break-up, while the Sunday Telegraph newspaper quoted unnamed shareholders as saying the decision not to consult them risked souring relations.
Reuters