Aviva immediately rejected the surprise offer for its general insurance arms in the UK, Ireland and Canada, made in a letter from RSA chairman John Napier last month.
There are no ongoing discussions between the companies, but some Aviva shareholders said they would be open to a sale at a better valuation.
“It’s trading at a pretty big discount to what you’d imagine the sum of the parts would be, and somehow they’ve got to find a way to release that,” said Jane Coffey at Royal London Asset Management, which owns shares in Aviva. “There is a price for everything,” Coffey added, but insisted a serious offer would have to be at a higher price. Analysts at Merrill Lynch reckon Aviva’s general business is worth just under £6bn.
Colin Morton, a fund manager at Rensburg, which owns RSA shares, said in principle he supported the group’s pounce on Aviva. “[But] there are concerns... and they would have to give us a convincing argument as to how they could run the business better than Aviva,” he said.
RSA has lined up BNP Paribas, Deutsche Bank and HSBC to underwrite a £5bn rights issue to fund the takeover. It estimates a tie-up would save around £300m in cost synergies.
“The reason Aviva has given the rejection is that it doesn’t want to sell. It’s totally up to the Aviva shareholders now, if they think this deal is important,” said a person close to the situation.
Aviva, the only insurer in the UK still offering both general and life insurance, maintains its general arm is important for generating cash and meeting capital requirements.