Beazley takeover price agreed with Zurich ‘just under’ fair value, say analysts Proactive uses images sourced from Shutterstock
Beazley PLC shares jumped over 8% to 1,258p after the board of the Lloyd’s insurer agreed to the terms of a bid from Zurich Insurance.
The Swiss giant’s offer values the FTSE 100 group at a sweetened total value of 1,335p per share in cash, including a dividend of up to 25p.
It is up from the 1,280p offered in January and up from the 1,315p reportedly offered behind closed doors last summer.
Beazley’s board states it would be ‘minded to recommend the offer’ should a firm one be made.
Zurich will now commence its due diligence as it works towards a binding firm offer by a deadline of 16 February.
Broker Panmure Liberum said the revised offer is 2.4 times trailing tangible net asset value, “which is towards the upper end past specialty insurers have been acquired for”.
“Our maths suggested that a price closer to 1,400p would be a fair price and affordable for Zurich. Either way, this is a good offer and classic of this point in the underwriting cycle, when pricing starts coming off peaks.”
Prior to the offer, analysts noted, Beazley was trading on only 1.3x TNAV having put out “confusing messaging”.
Analysts at Peel Hunt said the offer is “just under the 1,340p per share we considered fair”.
Those at AJ Bell said it had seemed “clear from previous statements that Zurich was determined to own Beazley”, with the 60% bid premium “higher than the average bump on UK takeovers in any of the past five years and could be sweet enough to win over shareholders”.
“The downside for the UK stock market is the potential loss of another major financials business, and one that has generated significant returns for investors over the years.”