Brit in talks after £850m Apollo offer
BRIT INSURANCE is sounding out its largest investors after opening its books to US private equity house Apollo on the basis of a £850m indicative offer yesterday.
Brit agreed to due diligence after Apollo raised its approach for the third time to £10.75
per share, just shy of the magic £11 per share touted by analysts. The offer included 30p per share pledged by the insurer to shareholders in its interim results.
Chief executive Dane Douetil is speaking to investors including Schroders, Jupiter Asset Management, Axa and Legal & General Investment Management, who own significant amounts of Brit stock. Their opinions will influence whether a deal goes ahead.
The development came as Brit smashed forecasts with a 12 per cent rise in first-half profits to £72.8m. Gross written premiums were 13.4 per cent lower at £851.5m. The claims ratio – stripping out the impact of the Chilean earthquake and an Air France crash – was down nine points.
Crucially, tangible net assets (TNA) per share grew 4.6 per cent to £11 by the end of June. TNA is the number cited by insiders in reference to the price Apollo should pay for Brit.
The announcement pleased analysts, whose profit estimates had ranged between £15m and £65m. Mark Williamson at KBC Peel Hunt said it was “likely a positive spin has been put on [the] numbers” in light of Apollo’s interest, but commended the company’s discipline in terms of writing new business.
Brit’s shares closed up 10 per cent at £10.05. Before Apollo arrived they were trading at around 729p, or a 31 per cent discount to TNA.