UK-based property and casualty (P&C) insurer, Hastings Group Holdings plc, has received a recommended cash offer from Sampo Oyj and Rand Merchant Investment Holdings Limited (RMI) to acquire all of its issued and to be issued shares not currently owned or controlled by the pair.
Towards the end of July, Hastings confirmed that Finnish insurer Sampo Oyj and South Africa’s RMI had approached the P&C insurer over a potential takeover.
Now, the pair have returned with a recommended cash offer of £250 per share, valuing Hastings’ entire issued and to be issued share capital at approximately £1.66 billion (€1.84 billion).
According to Sampo, the offer price represents a premium of roughly 37.5% to the volume-weighted average price of £182 per share for the three-month period until July 28th, 2020 – which is the last business day prior to Hastings revealing that it had received an initial approach.
For the purpose of acquiring the company, Sampo and RMI have established Dorset Bidco Ltd, a newly-established jointly owned firm. Once the deal completes, Sampo and RMI will own and control 70% and 30% of the shares and votes in the jointly owned company, respectively. Currently, RMI holds a 29.7% stake in Hastings which it acquired in 2017 for £248 per share.
Sampo’s investment, based on its 70% share, would be £1.16 billion (€1.29 billion) valued at the offer price. The Finnish insurer expects to fund some of the acquisition with around €1 billion of newly issued hybrid Tier 2 capital with the residual coming from existing cash resources.
For Sampo, the acquisition will enable it to expand its presence in the non-life insurance world, with the company believing that the UK offers an attractive scale opportunity.
In relation to the acquisition, Sampo and RMI have entered into a long-term partnership and the governance of the jointly owned firm reflects the relative shareholdings of both companies.
Furthermore, the independent directors of Hastings intend to recommend unanimously that the P&C insurer’s shareholders approve the offer and have entered into irrevocable undertakings to do so in an amount of 0.33 per cent of Hastings’ issued share capital.
The independent directors of Hastings were advised by Barclays, Fenchurch Advisory Partners, and Numis.
