A British company specialising in insuring against cyber-attacks that also covers fine art and luxury yachts has agreed to be taken over in an £8bn deal, in what would be the latest loss to the London stock market.
Beazley said on Wednesday it had agreed the deal with its larger rival Zurich, after the Switzerland-listed company raised its bid for the Lloyd’s of London insurer.
The two companies said in a joint statement that they had reached an “agreement in principle” on the main financial terms, under which Beazley shareholders will get up to £13.35 for every share they hold. This includes an offer price of £13.10 in cash and a dividend from the FTSE 100 company of up to 25p for 2025.
The offer price is almost 60% higher than Beazley’s closing share price on 16 January, the last business day before Zurich’s interest was made public.
Zurich had initially offered £12.80 a share, which was rejected by Beazley’s board last month. Beazley shares closed 6.9% higher at £12.40, helping to push the FTSE 100 index to a record high, while Zurich’s stock gained nearly 3.5% on the Swiss exchange.
Beazley’s board said it would be minded to recommend the new offer to shareholders should a firm bid be made – once Zurich has scrutinised its books.
Beazley offers specialist insurance products, with a particular focus on cyber cover, as well as insuring expensive yachts, fine art, aircraft and property, and offering reinsurance. It had batted away several previous undisclosed advances from Zurich.
The two companies said the deal would combine “two highly complementary businesses” and would establish a global speciality insurer with $15bn of gross written premiums, based in the UK.
The takeover would leverage Beazley’s presence at Lloyd’s of London, the world’s oldest and biggest insurance market, which traces its history to a coffee shop in 1688. Beazley is an important player in the market.
Zurich would wrap its speciality insurance business into Beazley. However, the takeover would mean the loss of yet another big company from the London market, at a time when the stock exchange and the City of London are trying to beat the drum for the UK.
Dan Coatsworth, head of markets at the stockbroker AJ Bell, said: “Zurich now needs to make a formal offer, and it looks like the deal could be sewn up in a jiffy. An approximate 60% bid premium is 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.”