Rsa Insurance Group Ld Share Discussion Threads

[chancer] 25/8/2015 16:01

The cull of senior positions, especially management will take out further future cost expense if the deal comes to fruition.

I remember TYCO was formed out of Modern Alarms, ADT Security and AFA Minerva who each had also taken over smaller companies previously.

There is no such thing as loyalty when money is concerned but we will always need the bread and butter workers.

I would not like to be in the management shoes if it goes ahead.

[srichardson8] 25/8/2015 15:29

Firstly, they must do due diligence and must satisfy their own shareholders (I happen to have both shares) that the deal is good for Zurich. Zurich shares have gone down since a second consecutive earnings disappointment and the confirmation of the bid. The RSA pension deficit in particular must be put under the microscope and shown to be a reasonable estimate of the real shortfall. This is notoriously difficult. The escape clauses in the statement are pretty clear, the Swiss are pretty cautious and the put up or shut up period has now been extended. All these suggest that until or unless another bidder appears, not unlikely imo but who knows, the shares will trade at a discount to the recommended sum. I do agree that the market reaction looks muted in view of the general recovery today but a 6% discount to the mooted exit price feels roughly right at this stage to me. this would close to around 2% if the offer went unconditional. There are no free lunches in the stockmarket.

[cc2014] 25/8/2015 12:57

Hmm - well the share price is telling me that there seems some risk it will still fall apart and a higher bid doesn't look likely.

Mind you with so many bargains elsewhere perhaps for those with limited capital they see more potential elsewhere than here

[blueteam] 25/8/2015 11:43

Holding as another bid may come in at 5.75 range reported from European company

[loganair] 25/8/2015 08:35

I am rather surprised that the share price hasn't gone to the take-over price of 550p which suggests maybe Hester is still saying to Zurich not enough and therefore Zurich may still walk away.

550p is the minimum amount to be credible as an offer and is why I think Zurich is letting the dividend to also be paid.

Insurance expert Eamonn Flanagan at Shore Capital said a takeover for RSA was now "inevitable". But he added a rival offer was still possible "from another Continental European insurer".

“We think this is a reasonable price,” said Ming Zhu, an analyst at Canaccord Genuity in London. “RSA made some strong progress in the first half of 2015. That provides some comfort to Zurich shareholders.”

The two firms had differed on price, with RSA demanding 600 pence a share and Zurich offering about 525 pence.

[dutch123] 25/8/2015 07:20

THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE.



FOR IMMEDIATE RELEASE



25 August 2015



RSA Insurance Group plc



Update regarding Possible Offer for RSA Insurance Group plc ("RSA" or the "Company")



The Board of RSA (the "Board") announces that it has received a revised proposal from Zurich Insurance Group ("Zurich") regarding a possible all cash offer for the Company at 550 pence per ordinary RSA share (the "Possible Offer"). In addition, under the terms of the proposal, RSA ordinary shareholders retain the right to receive the 3.5 pence interim dividend announced by RSA on 6 August 2015. The Possible Offer is conditional on, amongst other things, due diligence and the recommendation of the Board.



The Board has indicated to Zurich that it would be willing to recommend an offer at the level of the Possible Offer to RSA shareholders subject to the satisfactory resolution of the other terms of the offer. Accordingly, the Board is in discussions with Zurich in relation to these terms.



As required by Rule 2.6(a) of the Code, Zurich is required, by not later than 5.00 p.m. on 25 August 2015, to either announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer. With the consent of the Takeover Panel, RSA has agreed to an extension of the relevant deadline under Rule 2.6(c) of the Code until 5.00pm on 22 September 2015 to enable the parties to conclude their ongoing discussions. This deadline may be extended further with the consent of the Takeover Panel, at RSA's request, in accordance with Rule 2.6(c) of the Code.



Zurich has reserved the right to make an offer for RSA at any time, with a value less than 550 pence per ordinary RSA share (less any dividends declared, made or paid, other than the 3.5 pence interim dividend announced by RSA on 6 August 2015):

[dutch123] 25/8/2015 07:16

£5.50p per share, pretty good offer imo as a first offer?.

[alimo] 25/8/2015 01:11

If Stephen Hester can turn RSA round as quickly as he has, then what was wrong 18 months ago was not as seriously bad as the markets made it out to be. Markets savaged the share price because of the misreporting scandal in Ireland. That was dealt with ek-dum-budgie-hi, and any laxity stopped by the investigation. The RSA reputation however was damaged, but as during the Gamble era, the shares are grossly oversold, and Zurich, and Hester, as with Gamble, all know it.

The timing of the currency markets mayhem couldn't have been staged to happen any better, even if they tried. They are all buddies together and banks and insurance companies call in the markers to gain advantage. Zurich Insurance will know the gnomes of Zurich who probably know the gnomes of Beijing and might have called on a marker to pull the plug on the yuan, just for a time like this. The trading sharks haven't pushed RSA shares down far enough yet to let the Zurich Ins get away with a paltry offer, so the Yuan will probably go lower to cause more mayhem.

Stock markets plunge and soar to make money for the gnomes in control and in the know. THE MONEY DOESN'T GO AWAY. IT JUST MOVES AROUND FASTER AND MAKES A FEW PEOPLE EVEN MORE FILTHY RICH, WHILE THE REST OF US HAVE TO PAY. THEY'VE GOT IT ALL COVERED AND IT'S JUST TIME TO PROFIT BY MANUFACTURING/CAUSING ANOTHER FINANCIAL CRISIS. YOU WAIT AND WATCH FOR THE NEXT ROUND OF BANKERS BONUSES, AND THE DEEPER AUSTERITY CUTS THAT FOLLOW LIKE CLOCKWORK.

If Hester is worth the money we pay him, he will step away from this Zurich offer - they only want more time to get the price lower. To give control of RSA away to the Swiss will be a wrong move, especially when the EU is fracturing and being swamped by the consequences of global unrest manipulated by Russia/Iran/ISIL. It's not the time to allow RSA to be given away, when in 18/24 months a new round of calm will be brokered among the nations, and RSA's profits and dividends will be sound again. That's the time when Zurich might come begging for a merger with RSA with, control in London.

Stephen Hester, I say, walk away - now's not the time. You have aces in your hand that can trump anything Zurich is willing to pay. The big shareholders are in for the dividends that will increase faster than elsewhere so take them with you, and show them that you and the Board are in control; and the plans are working.

We also need you to protect our pension schemes, that are not underfunded to the tune being reported by the media. The last valuation shows a strong position, and with agreed funding in place.

[loganair] 24/8/2015 23:00

The two sides were said to have made progress on a potential deal over the weekend. Zurich is believed to have urged RSA’s chief executive Stephen Hester to ask the UK’s Takeover Panel to extend a so-called ‘put-up-or-shut-up’ deadline set for 5pm on Tuesday. It is thought to want more detail on matters such as pensions. Hester is believed to be pushing for a price as high as 600p a share, but is facing pressure from investors not to reject a reasonable offer.

Barrie Cornes, of Panmure Gordon, said “while it is natural for posturing on price, we believe that the combination of a high pre-bid valuation, falling equity markets and RSA being a 'jam tomorrow’ story means that Zurich won’t meet RSA’s view on valuation”.

However, Eamonn Flanagan, of Shore Capital, disagreed, citing benefits such as RSA’s assets in Canada and Scandinavia and its strong positions in Latin America. “The opportunities for Zurich in acquiring RSA are too good for it to walk away, and hence it will do its utmost to eke out a deal,” he said.

[loganair] 24/8/2015 22:56

Bids for RSA's Latin American business that have significantly exceeded recent expectations could allow Zurich to stretch its offer for the London-listed insurer towards the levels targeted by the RSA board.

Sources said that after a difficult start that had caused concerns about the valuation the Latin business would attract, or even its saleability, RSA has managed to find a number of parties interested in taking the whole segment.

[tfergi] 24/8/2015 22:21

Deal will deffo happen now as iv sold today.

Put my money into some nice FTSE dividend plays.

May yet regret

[cc2014] 24/8/2015 13:43

The share price today suggests the deal is on but I've sold out. Can't refuse 500 when it seems the bid is unlikely to be much higher than 550p (especially in view of where FTSE is now). Downside if this doesn't go through is sub 400p in this climate. Possibly 350p.

I reckon there's more than 10% upside on lots of stocks now so my money is better off elsewhere

[loganair] 24/8/2015 09:14

Zurich asks for extra time on £5bn RSA offer:


Zurich Insurance has called on its bid target RSA to give it more time to table a formal offer for its UK rival after the two sides made progress on the prospective £5bn-plus deal over the weekend.

According to people familiar with the matter, RSA is most likely going to agree to ask the UK’s Takeover Panel to extend a deadline set for this Tuesday for Zurich to make a firm bid or withdraw for six months.

Shares in RSA closed at 502p on Friday — far short of an acceptable take-out price for the FTSE 100 company’s shareholders, suggesting investors are sceptical Zurich will seal the deal.

Still, in a sign an agreement could yet be reached, the people said advisers had made headway on talks, described as friendly, since Friday.

However, the situation is fluid and there is no certainty RSA will request an extension. Zurich is calling for more information on matters ranging from RSA’s near-£8bn pension scheme to regulators’ view of its balance sheet under new capital requirements — and time to understand them.

RSA, led by chief executive Stephen Hester, has been holding out for a price as high as 600p a share. However, one person close to the situation said RSA investors were also eager to ensure the opportunity does not slip away because of the Takeover Panel deadline.

Mr Hester, who took the helm 18 months ago, has made progress in his push to help RSA recover from a string of profit warnings. But the insurer still faces pressure from weak investment income and intense competition. Last year the activists Cevian Capital became RSA’s largest shareholder. Cevian has not said where it stands on Zurich’s takeover interest.

A purchase of RSA would give Zurich access to the profitable insurance market of Scandinavia, make it the second-largest operator in Canada and help it build a presence in South America. The Swiss insurer, Europe’s fourth-largest by market value, could also make savings by merging its UK business with RSA’s.

However, the people stressed that Zurich will not budge from its required financial hurdles, including generating a return on equity of 10 per cent. Analysts have said this likely to prevent Zurich from offering more than 550p a share, depending on the scale of savings it can make.

RSA and Zurich declined to comment.

[loganair] 22/8/2015 09:28

As a long suffering share holder of RSA, personally I do not wish Hester to sell out to Zurich for less than 600p. If Zurich are not willing to pay 600p Hester tell them to just go away.

I'm saying this as in my good opinion this time next year RSA share price will be around the 500p level with a dividend for 2016 in the region of 15p and with a little good fortune for 2017 20p as RSA have said many, many times that they will be paying 40% to 50% of their profits in dividends.

If RSA remains independent I can see good dividend growth over the next few years and that is what is important, dividend growth.

Between them Artimis, Schroders and Newton own 51.31% of RSA, so basically the decision on whether Zurich takes over RSA is up to just these 3.

[loganair] 22/8/2015 09:18

Analysts at Barclays believe RSA’s negotiating position is ‘fairly limited’ and that Zurich would be fully prepared to walk away if the price is not right.

Andy Broadfield from Barclays’ equity research team predicted RSA would cut its asking price.

Analysts have said a reasonable offer from Zurich might be too tempting for long suffering RSA shareholders to turn down.

A tie-up would allow the enlarged company to cut costs.

But analysts have warned this could lead to 3,000 job losses in the UK. RSA employs around 8,000 in this country and Zurich roughly 7,000.

[loganair] 21/8/2015 20:37

Zurich's RSA bid "in jeopardy" claims FT

Analysts have said such a takeover could be a good fit for the two insurers.

Brokers were however a little more circumspect about the affect it could have on the market if the deal goes through.

Zurich, RSA investors face struggle to bridge valuation gap - The gap complicates efforts by advisers to both insurers to meet in the middle.

RSA's reaction to the bid interest from Zurich has been lukewarm, with chief executive Stephen Hester stressing that his goal is to deliver returns to long-suffering shareholders after several years of restructuring. "I see no magic in this year [for consolidation] and I see no magic in Zurich vis a vis anyone else."

[fludde] 21/8/2015 13:32

I'll be back in at £4 assuming the deal does not complete. Otherwise will watch the firesale at between £5.50 to £6.

[optomistic] 21/8/2015 11:53

Price plunging...not a good sign for the 'oddest takeover of the year'

[loganair] 21/8/2015 11:50

I would say the way the share price has reacted to day that the deal is off.

[ncnd] 21/8/2015 09:58

We won't know until next week and they may just put in a cheeky offer knowing they cannot try again for another 6 months after the expiry on Tuesday.

[tfergi] 21/8/2015 08:58

Not sure the deal will happen now

[loganair] 21/8/2015 07:42

A survey by Bernstein published this week indicates Zurich shareholders that have no interest in RSA think the purchase would be worthwhile only if the Swiss group paid less than 530p.

But their RSA peers, on average, regard 572p as an acceptable valuation. The gap of 42p a share is equivalent to about £400m.

The people said RSA, run by chief executive Stephen Hester, was demanding a significantly higher price than Zurich was prepared to offer — in the region of 600p.

Most Zurich investors would prefer the company returned capital to investors rather than buy RSA unless they also hold shares in the takeover target, according to the Bernstein study.

Bernstein found that a significant minority of investors that hold both stocks would prefer Zurich handed back the cash rather than go ahead with the deal — despite the likely upside for their holding in RSA.