Rsa Insurance Group Ld Share Discussion Threads

[loganair] 21/9/2015 20:24

The RSA board learned of Zurich’s cold feet late on Sunday, giving them enough time to draft a statement for Monday morning that made it clear that this was a problem on Zurich’s side, and not the result of any skeletons that might have emerged during explorations of RSA’s business.

Zurich’s dreadful quarterly losses are unlikely to be the sole cause of the £5.6bn deal collapsing. Zurich’s withdrawal came one day before the Takeover Panel's deadline to make a formal bid, yet the company had not yet completed its due diligence.

Friction remained between the two camps about a realistic price for RSA shares, despite agreeing to talk more in late August, when Zurich proposed an offer at 550p per share. Zurich had told investors that it would only deploy its $3bn cash pile on a takeover if it produced a return of more than 10pc.

Zurich is now barred from making another approach for RSA for at least six months, and the phalanx of bankers drafted in over the summer to negotiate the £5.6bn deal will almost all be stood down – without earning the break fee that is customary when a potential deal turns into a formal offer.

“I think we would put a low probability on another bid in the near term,” said Ben Cohen, an analyst at Canaccord Genuity. “Zurich was in a good place to bid, particularly with its understanding of the pension liabilities. At the end of the day, there’s just not that long a list of realistic buyers.”

Investors in RSA must now depend on the firm improving its own value through the restructuring plan driven by chief executive Stephen Hester, which will take until next year at the earliest, rather than cashing out through a takeover.

Cevian Capital, the activist investor that has been RSA’s largest shareholder for about a year, has never publicly spoken about the intentions behind its 9.8pc stake and declined to comment on Monday. It bought in when the shares were trading at around 450p, adjusted for last year's consolidation.

[loganair] 21/9/2015 19:09

chancer - you forgot..... Rather than pursuing the deal, Zurich said it would now conduct an in-depth review to restore the performance of its general insurance business, where it is expecting large losses, excluding those relating to Tianjin.

[alimo] 21/9/2015 18:13

Phew . . . ! That's good news.

[dutch123] 21/9/2015 17:35

only nursing if they sell...long term who know's....

[loganair] 21/9/2015 12:52

RSA Insurance (RSA) slumped 20.48% to 405.15p after Zurich Insurance decided not to make a bid for the company after the Swiss outfit said it was set to make losses in China, that the August explosions at the Tianjin container port in northern China will cost it at least $275m (£177m) and push the business to a $200m (£129m) loss.

Rather than pursuing the deal, Zurich said it would now conduct an in-depth review to restore the performance of its general insurance business, where it is expecting large losses, excluding those relating to Tianjin.

In another blow for Zurich, a recently completed review of reserves found a $300 million shortfall in relation to liabilities arising from the US motor industry.

A buyout had been seen as "an excellent exit route for long-suffering RSA shareholders", said Barrie Cornes, an analyst at Panmure Gordon. Instead, the company will have to continue "the tough job of delivering earnings from its reduced size" following the closure of loss-making divisions by boss Stephen Hester.

No Deal:

Zurich has confirmed that the “due diligence findings were in line with their expectations” and, while an offer had not emerged, Zurich “had not found anything that would have prevented them from proceeding with the transaction on the terms announced on 25 August“.

Back then, RSA announced that it had received “a revised proposal from Zurich regarding a possible all cash offer for the Company at 550 pence per ordinary RSA share“.

RSA now trades at 400p a share, and I am confident that its management team will continue to deliver on its promises. Moreover, its stock does not seem incredibly expensive at 1.1x book value.

That said, earnings multiples do not point to ‘bargain territory’, while forward core operating margins and cash flows may end up disappointing the bulls — all of which suggests to me that there might be better alternatives than the general insurance sector in this market. My advice is to keep RSA on your radar while paying attention to any news associated to new capital requirements across the industry.

Finally, RSA also noted today that since Zurich’s unsolicited interest on 28 July, it had made good progress in the delivery of its restructuring plan — indeed, it agreed to sell its Latin American division to Grupo Sura for about £400m earlier this month, in a deal that will strengthen its capital position.

[fizzypop] 21/9/2015 12:05

Time to buy is when RSA is cheap (300-350p) not when it's fair value post bid (400p).

[dins1249] 21/9/2015 11:33

It is impossible to think that Zurich were not aware of the losses they would incurr on their General Insurance so soon after they started sniffing at RSA. Who is going to take them to task for creating a false market in RSA shares. Or do these rules only apply to small individuals?

[diku] 21/9/2015 09:55

Those who bought around 400p before the takeover talks would have been wise to sell out at 500p on the news....don't be greedy...its a PLC casino out there!....

[optomistic] 21/9/2015 09:54

Will Hester be making a statement this week?

[ropey] 21/9/2015 09:42

Where is that White Knight !!?

[skyship] 21/9/2015 09:12

Hi Hybrasil - eventually answered yr message on the RQIH thread - take a look...

[mali7] 21/9/2015 08:35

Hope every1 took at least some profit out of the take over excersise! I sold all my holding once we hit above 500p on 2nd or 3rd day after announcement, at 510p.
I saw the share carry on up after my sell to 520p+, and thought did I sell to early? Anyway now feeling lucky banked all profit, as they say never be too greedy and reduce risk in this game is important.

Anyway for now wouldn't buy until 300-350p region and would like them to fall more to from current level to adjust to the recent down turn in overall market too. So patience needed but on watchlist. GLA

[tfergi] 21/9/2015 08:33

Glad I got out at 500p I was thinking I had messed up. Not that the shares I replaced them with are doing brilliantly either but I still made a nice profit.

[binladin] 21/9/2015 08:29

Recession and a down turn sell rating should see the fall to 300p...

[cwa1] 21/9/2015 08:25

Taken a few at just under £4. Hoping that the RNSs can be taken reasonably close to face value and that no nasties were thrown up in DD and that RSA are trading well and up with/ahead of expectations. Fingers crossed and all that.

[bbonsall] 21/9/2015 08:20

If anyone needs proof of mms deciding the share price of a stock, here it is. Those who always claim the share price is a reflection of supply and demand are proved wrong. This morning's opening share price was decided before a single share was traded.
To drop the share price to where it was before the bid, shows no allowance for the improved performance beyond expectations that RSA revealed after the bid was announced. Stupid, as ever!

[hybrasil] 21/9/2015 08:15

Surprised that share price has not fallen further. Despite the rns do you not feel that Zurich didn't like what they saw

[coley15] 21/9/2015 07:04

Takeover off.....

[dutch123] 15/9/2015 21:20

not forgetting their offer might be refused....still out, but like to check in...

[topvest] 15/9/2015 21:08

What do you expect them to say? They are in negotiations - they can't announce anything until its agreed.

[optomistic] 15/9/2015 17:43

geraldton1, two squeaky for me, sold all mine today (2 mins before they went up about 3p)
....announcement tomorrow no doubt...takeover goes through!
I don't think the RSA shareholders have been treat at all fairly throughout this 'takeover' been kept very much in the dark, I will be reluctant to become involved with any Hester run company again.

[geraldton1] 15/9/2015 17:00

Agreed optimistic....and again today. Squeaky bum time!

[optomistic] 14/9/2015 20:39

A fair finish today but the will they/won't they time is rapidly approaching!

[alimo] 12/9/2015 00:58

Hester will not sell RSA short if the correct offer doesn't come in. He doesn't need to. Maybe the Swiss option will be bad for UK if she pulls out of EU.