Beazley and Zurich agree terms, values Lloyd’s insurer at £8bn
Zurich has offered £13.35 per Beazley share, nearly 60% higher than Beazley’s closing share price of 820p on January 16, the last business day prior to the offer period. The Beazley board will recommend the offer to shareholders.
The transaction would combine two highly complementary businesses, said Zurich, and would establish a leading, global specialty platform with around $15 billion of gross written premiums, based in the UK which would also leverage Beazley’s Lloyd’s of London presence.
Commenting on the deal, Moody's Ratings senior credit officer Helena Kingsley-Tomkins said: "Zurich’s bid for Beazley would accelerate its specialty insurance ambitions, adding scale in fast‑growing areas like cyber. But the deal’s high price and integration hurdles mean Zurich would face elevated execution risk and a short-term weakening of surplus capital."
Adrian Cox, chief executive of Beazley, has previously said a tie-up between the two could create “a very powerful engine” and that Zurich had talked about retaining the Beazley brand and moving $9 billion of business across to the specialist insurer. Combining with Zurich would expand Beazley’s reach beyond the 20 countries in which it now operates, adding new areas of insurance, such as construction, Cox said.
Zurich submitted a proposal to Beazley on January 14 priced at £12.30 per share, which the Beazley board rejected two days later as significantly undervaluing the specialist insurer.
Yesterday, it emerged that Zurich had already taken a 1.47% stake in the specialty insurer.
Zurich is now embarking on due diligence with Beazley, prior to a binding offer announcement.
The proposal, if accepted by shareholders, comprises an offer price of £13.10 pence in cash, and Beazley paying its shareholders permitted dividends in respect of the year ended December 31 of up to 25 pence prior to completion.
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