Brit launches bid for Chaucer

LLOYD&rsquo;S of London insurer Brit Insurance made a &pound;226m all-share offer for smaller rival Chaucer yesterday, forcing private equity group Pamplona to reveal it has built a 7.34 per cent stake in the company.<br /><br />Brit is offering the Chaucer board 0.23 new Brit shares for every Chaucer share. This is a nil-premium offer, meaning it risks being trumped by a higher bid.<br /><br />Briti faces competition from private equity firm Pamplona Capital Management, which issued a statement to markets in the wake of the Brit offer claiming it now owns 40m Chaucer shares.<br /><br />Pamplona, whose investment directors include former Resolution boss Paul Thompson, also said it has applied to City watchdog the Financial Services Authority for permission to build up a holding of over 10 per cent in the firm. <br /><br />It also reiterated its plan to eventually up its Chaucer stake to 29.9 per cent. Chaucer said its shareholders should take no action while it studys Brit&rsquo;s offer.<br /><br />A spokesperson for Brit said the company was aware of the filing to the stock exchange by Pamplona, adding: &ldquo;The statement Brit announced this morning still stands.&rdquo;<br /><br />At nearly a third below Chaucer&rsquo;s book value, the Brit bid is unlikely to be entirely popular with its shareholders.<br /><br />The bid was also undermined by a strong trading update from Chaucer yesterday, which suggested the shares could be more valuable.<br /><br /><strong>CONOR HILLERY<br />JPMORGAN CAZENOVE<br /></strong>Brit Insurance took on JPMorgan Cazenove (JPM Caz) as a joint broker, along with its existing broker Numis, on 20 January 2009.<br /><br />Since then the investment-banking giant has been hard at work crunching the numbers on Chaucer. <br /><br />Irish-born finance heavyweight Conor Hillery, JPM Caz&rsquo;s corporate finance division managing director for EMEA, has been leading Brit&rsquo;s search for buyout targets.<br /><br />Educated at University College Dublin, Hillery qualified as an accountant at the Irish offices of &ldquo;big four&rdquo; accountancy giant KPMG before spending the last ten years in London &ndash; eight of which have been at JPM Caz.<br /><br />Hillery is also head of the JPM Caz team that brokered and sponsored the recent rights issue by Lloyd&rsquo;s of London group Catlin.<br /><br />The keen golfer played a key role in the integration of JPMorgan and Cazenove in 2004.<br /><br />Fighting for the best deal for Chaucer is Tom Booth, at longstanding house broker at Numis. <br /><br />Meanwhile Pamplona&rsquo;s move to capitalise on yesterday&rsquo;s Chaucer announcement by upping its stake in the insurer was led by Stephen Howard at Keefe, Bruyette &amp; Woods.