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According to Sampo, the company’s strategic goal is to further grow its non-life insurance business. LEAF PICTURE / BERRY AIRIO
The insurance company Sampo has made a tender offer for a 70% stake in the British non-life insurance company Hastings Group Holdings. The value of the investment would be EUR 1.29 billion.
Sampo made a takeover bid together with Rand Merchand Investment Holdings Limited (RMI), a South African investment company. Following the transaction, Sampo would own 70 percent of the British company and RMI 30 percent.
RMI, which focuses on companies in the financial sector, has already owned 29.7 per cent of the UK company.
According to Sampo, the company’s strategic goal is to further grow its non-life insurance business. Sampo already has a leading position in the Nordic non-life insurance market, which is why the company wants to expand its geographical area of operation to a wider extent than at present.
“As one of Europe’s largest personal non-life insurance markets, the United Kingdom offers an attractive opportunity to expand,” Sampo writes in a statement.
British market leader
According to Sampo, Hastings is the leading motor insurance company in the UK. The company has recently expanded its operations to include home insurance.
– Both motor insurance and home insurance form a large market in the United Kingdom, which means growth opportunities for Hastings’ business, Sampo envisions in its press release.
Founded in 1996, Hastings has about three million customers and employs more than 3,500 people.
Sampo and RMI will offer £ 250 for each Hastings share, which means that Hastings’ share capital will be valued at around £ 1.66 billion, or around € 1.84 billion.
The offer price corresponds to a premium of approximately 37.5 per cent compared to the average price of £ 182 for Hastings shares in May-July before Hastings announced deals pending at the end of July.
Sampo’s Board of Directors estimates that the acquisition of Hastings will increase the Group’s earnings per share from the first full year following the completion of the transaction. Sampo estimates that the acquisition of Hastings will have a positive impact of approximately 5 percent on its earnings per share.
The result weakened by almost a fifth
On Wednesday, Sampo also announced its April-June result, which weakened by almost a fifth. The Group’s profit before taxes fell to EUR 407 million in the second quarter, compared to EUR 506 million a year earlier.
However, according to Torbjörn Magnusson, President and CEO, the second quarter was strong for the Sampo Group despite the uncertainty related to the coronavirus.
According to Magnusson, the backbone of Sampo’s profitability was the exceptionally successful non-life insurance business. At the same time, the investment market reversed its negative development in March-April as the stock market recovered rapidly.