Insurer Hardy rebuffs offer from Beazley

City A.M. Reporter
Lloyd’s of London insurer Beazley yesterday said it still hoped to clinch a takeover of Hardy Underwriting after its smaller peer rejected an initial 300p per share approach this month.

Dublin-based Beazley said its proposed cash offer on 6 October valued Hardy at about £155m. The approach, which represented a 36 per cent premium to Hardy’s closing share price on 5 October, was rejected by the Bermuda-based insurer in a letter dated 8 October.

Hardy said the offer substantially undervalued the company and its board had rejected it unanimously as an opportunistic attempt to buy the group. Hardy’ s shares rose 17 per cent to 285p in early trading, before closing at 290p. Shares in Beazley rose 4.7 per cent to 119.9p making the company the second-biggest riser in the FTSE 250 share index. They closed at 118p.

Analysts said the rise reflected prospects that Beazley would earn a positive return on its cash reserves – generating almost no returns now because of low interest rates – if the deal goes ahead.

Consolidation among Lloyd’s insurers, which offer cover against large-scale risks such as natural disasters, has long been mooted as cyclically low insurance prices weigh on their shares, although deals can be difficult to secure. Brit Insurance agreed to a £850m offer from buyout firm Cinven Capital Partners and Apollo Management last month.

Beazley, which in July said its first-half profit nearly quadrupled, said on Monday it would continue talks with Hardy’s board and shareholders with the aim of agreeing a recommended deal.