Brit Opens Its Books to Apollo After Firm Makes $1.3 Billion Third Offer
A businessman leaves the Brit Insurance Holdings NV headquarters. Photographer: Chris Ratcliffe/Bloomberg
Brit received a cash offer of 10.75 pounds a share
Brit Insurance via Bloomberg
Brit Insurance Holdings NV chief executive officer Dane Douetil.
Brit Insurance Holdings NV chief executive officer Dane Douetil. Source: Brit Insurance via Bloomberg
Brit Insurance Holdings NV, the U.K. insurer that sponsors the England cricket team, granted Apollo Global Management permission to review its books after the private equity firm increased its offer for the company.
Apollo is prepared to pay about 851 million pounds ($1.3 billion), or 10.75 pounds a share, in cash for Brit, the Amsterdam-based insurer said today in a statement. The bid, Apollo’s third, is 47 percent higher than Brit’s closing share price on June 10, the day before the first takeover offer was announced. The insurer rejected a bid of 10.50 pounds a share on July 2.
Apollo’s proposal “is a good basis on which we can start discussions,” Chief Executive Officer Dane Douetil said in a telephone interview. “All we’ve agreed to do is open the books to help them come to a conclusion about what final offer they’re going to make.”
Apollo first bid for Brit in June after the insurer’s share price fell 4 percent in the previous 12 months, compared with a 12 percent rise in the FTSE ASX Nonlife Insurance Index. Brit has had higher claims from financial firms protecting themselves against lawsuits in the past year and expects to pay out about $71 million for the Chilean earthquake in February.
“The tone of management points to an increasing level of acceptance for this takeover,” said Christian Stobbs, a London- based analyst at KBC Peel Hunt Ltd. with a “buy” rating on the stock. The 10.75 pounds a share Apollo is prepared to pay for Brit is “fair value,” he said.
Shares Gain
The stock climbed 90.5 pence, or 9.9 percent, to 1,004 pence at 11:55 a.m. in London trading, valuing the firm at about 796 million pounds.
Private equity executives are resuming purchases after the credit crisis halted dealmaking. The firms have announced $75.4 billion of takeovers this year, more than double the same period in 2009, according to data compiled by Bloomberg.
Apollo’s due diligence will take “a number of weeks,” Douetil said, declining to give a specific timeframe.
Brit posted first-half net income of 67.4 million pounds, compared with a loss of 6.3 million pounds a year ago, the insurer said today in a separate statement. That beat the 39 million-pound estimate of eight analysts surveyed by the insurer.
Brit had a 20.3 million-pound gain as the U.S. dollar climbed against the British pound in the period. The insurer also unlocked 41.9 million pounds of reserves that backed potential claims in previous years in the first half, compared with 19 million pounds a year ago.
To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net
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