Brit Insurance jumps 25 per cent after rejecting buyout bid

Brit Insurance Holdings NV (LON:BRE), which specialises in property and casualty insurance, has soared to the top of the FTSE 250 gainers sheets this morning as the group added 25 per cent to it’s share price by rejecting a reported £785m takeover bid from US group Apollo.

Rob Hull
shareprices.com - Friday, June 11, 2010

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Brit Insurance is the England cricket team sponsor

The Telegraph reported today that Brit Insurance Chairman, John Barton, met with Apollo earlier this week after the private equity firm offered £10 a share for the Lloyds of London insurer.

However, the British group released a statement yesterday saying the Board had reviewed the proposal and concluded it ‘significantly undervalues’ the firm and has therefore rejected the offer and any future offers on that basis, despite the offer being worth 30 per cent more than the yesterday’s closing price of 729p.

When the market opened this morning, the group jumped an initial 21 per cent – the biggest rise the group’s recorded in over 15 years – and grew to a morning-high price of 913.50 to gain a total of 25 per cent and put the insurers value to around £700m.

The company, which sponsors the England cricket team, distributes insurance and re-insurance globally through a number of brokers.

The last major movement for the group came in February when it reported a 300 per cent increase in full-year profits with profit before tax rocketing to £171.3m from £39.6m the year previous, and in June 2009 when the group abandoned an all-share merger with rival Chaucer after a four month saga of negotiations to split the two companies.

The group has appeared to be an attractive option for investors and potential bidders due to a high dividend yield of more than eight per cent, reflecting its strong cash resources.

Also posting strong gains on the FTSE 250 this morning are Yell Group (LON:YELL), the parent firm of The Yellow Pages, pub chain owners Punch Taverns (LON:PUB) and industrial conveyer-belt manufacturer Fenner (LON:FENR).

At 11.42BST the FTSE 250 index is 0.9 per cent up, gaining 85.34 points to 9695.02.

 

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