Aviva shares soared by around 10 per cent this morning, continuing a rally this week spurred by fresh but unconfirmed reports it could be the target of a takeover bid from a foreign buyer.
The insurer declined to comment on the speculation.
Shares rose to 426.84p this morning, taking Aviva to the top of the FTSE 100 and bumping up the value of a slew of other insurers. They were hovering between nine and 10 per cent after the open.
Aviva’s share price rally began with reports in the Financial Times on Wednesday citing market gossip that the firm could be subject of a takeover bid.
This morning, The Times’ said that City chatter had “refused to die down,” with City sources claiming that two potential buyers were lining up to bid for the firm.
Foreign players Allianz, Intact Financial and Tryg are reportedly among the interested parties and analysts said this morning that its excess capital and strong cash flow made it appealing for any would-be suitor.
Russ Mould, investment director at AJ Bell said “is Aviva the next FTSE 100 takeover target? The market certainly seems to think so, judging by the 7 per cent share price jump on Friday.
“Chatter that foreign players Allianz, Intact Financial and Tryg are among the potential interested parties has fired up the shares, hot on the heels of a bullish broker note earlier this week.”
Mould noted that activist Cevian Capital – which sold its entire stake in Aviva in May – was no longer around to cause “mischief,” while the insurer is left as “one of many stocks on the UK market looking unloved but still offering the potential for long-term value generation.”
Boss Amanda Blanc has been leading a turnaround at the firm, while looking to cut the insurer’s exposure overseas to focus on its three core markets in the UK, Ireland and Canada.
Mould added: “One of the obvious times to buy a company is when it has made solid progress with a turnaround programme as that de-risks the investment case.
“Aviva has cast off the shackles of being a conglomerate and sharpened its focus as a result of asset disposals and a new impetus to grow, making it a stronger business.”
It is believed the original source of the chatter was Betaville – an website which speculates on deals in the City.