BRIT Insurance, the Lloyd’s of London outfit, has asked the City watchdog to investigate the leaking of a £785m takeover offer for the business from US private equity group Apollo.
Brit’s board, led by chief executive Dane Douetil and chaired by John Barton, is said to be concerned after news of an anonymous approach was reported by a trade magazine before a stockmarket announcement had been made last Thursday.
Barton has asked the UK Listing Authority, a subsidiary of the Financial Services Authority (FSA)
, to find the leak. A person close to Brit said: “They were concerned that the circle who knew about [Apollo’s offer] from the Brit end was small, and they wanted to try and establish where [the leak] came from.”
Although there is no suspicion of insider trading, the unusual intervention by the FSA threatens to disrupt negotiations between Brit and Apollo, which is mulling a higher offer after its first bid at £10 per share was immediately knocked back.
Brit is expected to meet its largest shareholder, Schroders, today to discuss the impasse with Apollo. The firm has the backing of most of its top 10 investors to hold out for an offer of at least £11 per share – equal to forecasts of its tangible net assets for 2010 – but some smaller fund managers say they would be prepared to sell at £10.50.
Apollo’s advisers, Merrill Lynch and West Hill, are understood to have spoken directly to some shareholders. They have made clear Apollo is serious about buying the firm but said it is sensitive on price because it is not a trade buyer, and will not be able to extract significant synergies.