ZURICH: The Swiss insurance giant, Zurich Insurance, has announced that it wants to purchase its British rival Royal & Sun Alliance.
The company said it “confirms that the company is evaluating a potential offer for RSA,” while adding that the announcement did “not amount to a firm intention” to bid.
RSA’s share price soared 14.32 percent to 500.5 pence in midday trading on the London bourse, which was up only 0.79 percent overall.
On Monday, the Financial Times reported that RSA Insurance’s share price was climbing because of speculation swirling over a potential deal with Zurich.
In its online edition on Tuesday the FT cited unnamed informed sources as saying that Zurich Insurance had not yet approached the British group. One source said Zurich Insurance was planning to offer 550 pence per share, which would add up to a deal worth 5.6 billion pounds (7.9 billion euros, $8.7 billion).
“A takeover of RSA could make sense, adding synergy potential in the UK, a profitable Northern Europe platform and some Latin America reinforcement,” said analyst Stefan Schuermann of the Vontobel investment bank.
Zurich Insurance indicated to investors in May that it had a capital surplus of some $3.0 billion that it planned to redeploy by the end of 2016, either through acquisitions or by paying out to shareholders.
