Canopius eyes Omega takeover

LLOYD’S of London insurer Omega yesterday announced that is has received a potential offer for the firm – from a rival that made a far more generous bid at the end of last year.

Fellow Lloyd’s firm Canopius has made an offer of 65p per share in cash for the company, well below the 83p per share offer that it made last September. The new proposal values Omega at around £160m and shareholders will be consulted on the offer.

Market sources said the offer was a “substantial premium to the undisturbed share price”.

“Shareholders are pretty fed up with Omega. Their thinking is probably that [the new offer] isn’t as good as 73p but that if we hang around then we might get even less – this company has lost money and says it is going to lose more in the future,” the source said.

Shares in the firm closed down 1.2 per cent at 62p. The thinly traded stock had climbed more than 25 per cent since mid-March on renewed takeover speculation but remains far below a 2008 peak of 172p.

“There can be no certainty that a formal offer from Canopius will be forthcoming on these or other terms,” Omega said in a statement.

Last month the firm was forced to cancel its dividend after pre-tax losses doubled to $94.7m (£60m) in 2011, up from $42.9m the year before.

Small Lloyd’s of London players are seen as vulnerable to takeovers because persistently weak insurance prices have weighed on their shares, with proposed tighter capital requirements for European insurers adding further pressure. The industry had a troubled 2011 but Omega’s results were worse than most of its rivals.

The firm is one of the smallest operators on the market and barely survived a troubled 2010 during which almost its entire board were replaced as part of a bloody boardroom battle.