One of Britain’s oldest companies will be split after a £7.2bn takeover by foreign competitors.
Dating back to 1706, RSA Insurance Group has recommended that its shareholders approve a joint offer of 685 pence per share from rivals Intact of Canada and Tryg of Denmark.
The sale of the company, which owns More Than and underwrites home and pet insurance for the likes of Tesco and John Lewis, will generate a net profit of £15.8 million for CEO Stephen Hester.
Takeover Offer: RSA Insurance Group has advised shareholders to approve a joint offer of 685 pence per share from rivals Intact of Canada and Tryg of Denmark
If the deal goes through, he will leave with his windfall and could get another tough job elsewhere.
As Hester greeted a “sad but proud” moment for RSA, critics urged shareholders to think twice before voting as the country faces the loss of one of its oldest and largest companies.
Alexander Stafford, a Tory MP who sits on the Business Select Committee, said: ‘RSA is one of the jewels of British business and should be kept on the London Stock Exchange.
“Modern insurance was invented in Britain, and one of its giants, RSA, should remain listed in the UK.”
As it stands, the deal could potentially see hundreds of job cuts.
RSA will not require a UK headquarters, meaning large groups of workers in its office on London’s Fenchurch Street could be out of work.
It’s a good day for two Stephens: Tycoons make millions in million
RSA boss Stephen Hester, left, stands to earn £15.8 million if RSA sale goes through. Stephen Lansdown, right, sold £103m worth of shares through his company PHL Limited
RSA boss Stephen Hester is set to make £15.8 million if the sale to Tryg and Intact goes through.
The 59-year-old will reap a windfall by selling stock he owns directly and others he could get through bonus schemes, which he’s accumulated with the company over nearly seven years.
But this is a fraction of the amount Stephen Lansdown, co-founder of Hargreaves Lansdown (HL), cashed yesterday when he acquired a stake in the investment platform he helped build.
The now retired entrepreneur sold £103 million worth of shares through his firm PHL Limited, increasing his stake in HL from 7.1 percent to 5.7 percent.
Lansdown, 68, has an estimated net worth of £1.35 billion after co-founding the platform in 1981 with his business partner Peter Hargreaves.
He owns the Bristol Bears rugby team, Bristol Flyers basketball team and Bristol City Football Club, as well as interests in a luxury Botswana safari and golf course in low-cost Guernsey, which he moved to in 2010.
Lansdown has sold HL shares worth more than £225m so far this year, selling £171m worth just weeks before the Neil Woodford scandal hit last year.
Hester, meanwhile, pointed out that he had never sold any of his shares in RSA before. The US-born executive sealed his reputation as a serial deal maker after joining Abbey National in 2002.
First as finance director and then chief operating officer, he helped solve Abbey’s problems and was instrumental in the sale to Santander in 2004.
He then joined British Land as boss, before becoming CEO of RBS (now Natwest) in the wake of the financial crisis.
In an effort to allay the concerns, Hester said: ‘Our HQ employs less than 150 people, and I think quite a few of those people will be needed as some of the functions move to our UK operations that previously became corporative done. I therefore expect that the number of direct layoffs in the UK will be very modest.’
Intact will acquire RSA’s Canadian and UK operations, while Tryg will acquire the Swedish and Norwegian operations. They will each own half of the Danish branch of RSA.
But where there is too much overlap, Intact and Tryg will also cut jobs.
Following the merger, Intact plans to cut up to 2 percent of its workforce in Canada and Tryg plans to cut between 10 and 15 percent of its workforce in its Norwegian and Swedish companies.
RSA has yet to convince its shareholders to approve the deal. Its largest shareholder, Swedish investment firm Cevian Capital, which owns a 14 percent stake worth £1 billion, has already agreed to the sale.
And Hester, who said he had done everything he set out to improve the company, urged shareholders not to ignore the £7.2bn price tag.
He said: ‘We were in no way asking or looking for a deal. This position allowed us to strike a hard deal, so when the bidders first called in mid-August – and I’d been in independent contact with both of them for several years prior – when it wasn’t a situation we’d been looking for , we felt in a very strong position to say that we won’t give up our independence unless it’s for a really premium value.”
He added that RSA is now a strong company, following the turnaround he led after joining in 2014.
He said: ‘I view the offer with a mixture of sadness and pride. Sadness because it will mark the end of a chapter for RSA.
“Proud because I believe this is happening out of strength, because others recognize what a great company RSA has become.”
RSA was founded over 300 years ago in the wake of the Great Fire of London. When it listed on the stock exchange in 1983, it was worth only £451 million, but it is now listed on the FTSE 100 index.
It employs approximately 14,000 people and has more than 9 million customers in 100 countries.
Tryg boss Morten Hubbe said it was “very unique” to be able to buy a company of RSA’s quality. The sale was “a tough nut to crack,” especially since it was negotiated over the internet, he said.
If shareholders agree on a deal, another company will exit the UK’s FTSE 100 index of leading companies. Since the pandemic sent prices down, buyers have been circling companies such as G4S, William Hill and LV.
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The post RSA Insurance Group to be split as it seals a £7.2bn acquisition appeared first on Notesradar.
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