In a move that has shaken the insurance industry, London-listed specialist insurer Beazley has rebuffed a £7.7 billion takeover proposal from Swiss rival Zurich Insurance. The offer, which Beazley’s board unanimously rejected, was lower than a previous approach made by Zurich last June, valuing the company at £8.4 billion.
Zurich’s latest proposal of £12.80 per share was an increase from its earlier offer of £12.30 per share on 4 January, which had also been rejected. However, Beazley stated that the latest approach “materially undervalues Beazley and its longer-term prospects as an independent company.”
The board of Beazley, a FTSE 100 listed firm, highlighted that the terms of Zurich’s latest proposal were lower than the £13.15 per share offer made in late June last year, which had also been turned down. Beazley expressed confidence in its standalone prospects and the attractiveness of its business model, believing the company is uniquely positioned to maximise long-term shareholder value within the global insurance market.
Zurich, which has over 63,000 employees and is headquartered in Switzerland, argued that the potential offer represents a 56% premium on the value of Beazley’s shares prior to the proposal being made public. The Swiss insurer believes the transaction would create a global leader in specialty insurance, with around $15 billion (£11.2 billion) in gross written premiums, exceptional data and underwriting expertise, and a leading market and distribution capabilities.
Abid Husain, an analyst at Panmure Liberum, stated that Zurich has room to increase its bid, given the potential for significant expense and capital synergies should the deal go ahead. Husain also noted that Beazley has demonstrated its ability to manage risk effectively and has exposure in key structural growth areas.
Zurich has until 16 February to either make a formal offer to acquire Beazley or walk away, as per the UK Takeover Panel rules.
