Zurich Insurance has made an offer of around £7.7 billion to acquire FTSE 100 company and fellow insurance giant Beazley plc.
The offer of 1,280p in cash per share, which comes after a previous offer was snubbed, represents a 56% premium to Beazley’s 820p closing price on 16th January and a similar uplift to its 30-day volume-weighted average share price.
This share price has now been dwarfed, as the London-based company’s stock has risen by a remarkable 42% to 1,173p in the last hour – around 200p higher than it has ever been in its 22 years as a public company.
The Swiss insurer’s latest approach marks an increase on its earlier 1,230p proposal submitted on 4th January, which Beazley rejected on 16th January as it “significantly undervalued” the business.
It also highlighted that the bid sits 27% above the median analyst target price and 32% ahead of Beazley’s previous all-time high of 973p, saying that the proposal “provides full value” and is intended to prompt rapid engagement.
Any dividends paid from the date of the announcement would reduce the offer price.
The insurer framed the deal as a strategic push to build a stronger global platform in specialty insurance, combining the two businesses into a group with around $15bn of gross written premiums.
It said the enlarged operation would benefit from Beazley’s Lloyd’s footprint and underwriting expertise, alongside Zurich’s scale, reinsurance capabilities and technology infrastructure.
The acquisition will be funded through a mix of existing cash, new debt facilities and an equity placing if it goes through, and will support Zurich’s broader ambition to grow its specialty unit.
Beazley, a specialist risk insurance and reinsurance company with a strong focus on cyber insurance, has yet to formally respond to the improved offer.
However, Zurich is pressing for talks, claiming the bid delivers “immediate and certain cash value” that exceeds what shareholders could expect over a reasonable period under Beazley’s standalone strategy.
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