RSA chief Hester tells suitor Zurich: Put up or shut up on your £5.5 billion takeover bid

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Zurich has admitted it is interested in buying RSA but there have been no formal talks between the two parties ahead of a possible £5.5 billion deal.

Under UK takeover rules, Zurich has until August 25 to make an offer and Hester told the Standard: “They have put themselves in a put-up-or-shut-up situation… the ball is now in their court.”

Once a stock-market darling, RSA’s reputation has been hit since the discovery of a £200 million black hole in its Irish business in late 2013.

Hester joined the company last year following a five-year stint as the chief executive of state-owned Royal Bank of Scotland.

He said the value of RSA staying as a standalone business remained “strong” as its pre-tax profits recovered from £69 million last year to £288 million in the six months ending June 30.

“From being the poor performer in the class, we’re now sitting somewhere in the middle,” he added.

RSA insurance company buildingRSA’s first half profits increased sharply (Picture: Toby Melville, Reuters)


“Our challenge is to get to the top of the class, although it’s fair to say that we’re no longer wearing the dunce’s hat.”

In Switzerland, Zurich’s chief executive Martin Senn said a tie-up with RSA could bring “significant benefits” to its own investors.

However, he warned it would not overpay as its half-year operating profits dropped by 15% to $2.2 billion  (£1.4 billion).

According to reports, Zurich’s advisors, including Morgan Stanley, are believed to be weighing up a 525p-a-share cash offer, lower than the 600p mooted by some analysts but above RSA’s current share price, which fell 8p to 516p.

RSA’s advisory team includes Goldman Sachs and Robey Warshaw.

“Our shareholders have had a tough time and we’re determined to make that happier,” said Hester, who declined to comment on separate reports that the company is planning to offload its £500 million Latin American business.

One company that will not be joining any bidding war is Aviva, which today impressed the City with a 9% rise in operating profits to £1.1 billion, following its £5.6 billion tie-up with Friends Life in April.

“We have a very full agenda and a lot to do with the integration of Friends Life,” said boss Mark Wilson. “Our focus is on that full agenda.”

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August 6, 2015 |
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