Brit recommends CVC and Apollo bid

 
City A.M. Reporter
BRIT Insurance has recommended shareholders accept an £850m offer after buyout firm CVC Capital Partners on Friday agreed to link up with original bidder Apollo Management.

Lloyd’s of London insurers, which offer cover against large-scale risks such as natural disasters, have emerged as potential takeover targets because cyclically low insurance prices have weighed heavily on their shares.

Brit Insurance agreed to open its books to Apollo in July after the US private equity company raised its offer to £10.75 a share having had two bids knocked back.

A Brit Insurance spokesman told Reuters CVC came on board during Apollo’s due diligence.

“During the course of the due diligence that Apollo had been undertaking it became apparent that Apollo wouldn’t be able to do this on their own. CVC approached the board of Brit at that time and the board of Brit worked quite hard to get Apollo and CVC in a place where they could work together on this,” the spokesman said.

Brit Insurance said the offer from the Apollo, CVC consortium also valued the business at 10.75p per share, but included a provision through which shareholders would receive a further 25p per share should Brit’s net tangible asset value be more than £11 per share at the end of 2010.

The offer would be adjusted on a linear sliding scale should the NTA be between £10.75 and £11.00 per share, it said.

Shares in Brit Insurance closed unchanged at 989p per share, valuing the business at £782m.