TheChek News Flow

Canada’s Intact Financial and Denmark’s Tryg have made a joint bid for the 300-year-old group

UK insurer RSA said it is in talks to sell itself to a consortium in a £7.2bn deal that would break-up the 300-year-old group. 

Canada’s Intact Financial and Denmark’s Tryg have proposed paying 685p per share for RSA, the UK insurer said in a statement on Thursday. That is a 48 per cent premium to where the stock was before trading opened on Thursday.

If the bid is successful, Intact will take control of RSA’s UK and Canadian businesses for £3bn, while Tryg would acquire the operations in Sweden and Norway for about £4.2bn. The two groups would co-own RSA’s Danish business. 

RSA said it received the proposed offer on October 2 and has entered into discussions with the bidders.

“The board of RSA has indicated to the consortium that it would be minded to recommend the proposal, subject to satisfactory resolution of the other terms of the possible offer, including a period of due diligence,” the UK insurer said. 

RSA, which employs 12,400 people, has been run by former RBS chief executive Stephen Hester since 2014, when he joined after the company discovered problems in its Irish business. He shored up the balance sheet with a £773m rights issue and sold some of its international businesses.

There was another hiccup in 2018 when the company had problems in its London-based commercial insurance operation. Since then it has exited several lines of business.

RSA has long been seen as a takeover target, having been close to agreeing a sale to Switzerland’s Zurich Insurance in 2015. More recently, it has been linked with Aviva, which also has a big presence in the UK and Canada.

The speculation over its future had been building as analysts debated how much longer Mr Hester would stay at the company. Some in the insurance industry have considered Scott Egan, head of RSA’s UK business, as a potential successor to Mr Hester. 

“It’s difficult to see another bidder emerging at this point. A rival consortium bid possibly involving Aviva and Sampo could have made some sense but neither company is in a position to do so right now,” said James Shuck, an analyst at Citigroup.

“Any rival bidder would find it very difficult to match the offer price given the size of the synergies that would be available to the existing consortium,” he added. 

Shares in the London-listed company surged to close at 670p on Thursday after Bloomberg first reported on the interest from Intact and Tryg. Under UK takeover code guidelines, the bidders have until 5pm on December 3 to make a firm offer. 

If it is swallowed up, RSA would become the latest UK insurer to be bought by an overseas rival. In August, Hastings accepted a £1.7bn bid from Finnish insurer Sampo and South Africa’s Rand Merchant. Germany’s Allianz bought general insurance businesses from LV and Legal & General. 

Food-delivery continues to be a bright spot but doesn’t offset overall revenue decline

Uber Technologies Inc. UBER 2.05% posted another big loss as the coronavirus pandemic continued to batter its core-ride sharing business, though its shares rose for a second straight day in part because of a key regulatory win in California.

Gross bookings for Uber’s rides declined 53% year-over-year in the three months ended Sept. 30, the San Francisco-based company said Thursday. That was better than the previous quarter, when rides were down 75%.

Food-delivery has been Uber’s lifeline during the pandemic. Eats bookings more than doubled year-over-year and advanced 23% over the previous quarter. But the uptick wasn’t enough to offset the 10% decline in overall bookings and 18% drop in revenue to $3.13 billion.

Net loss for the period narrowed to $1.09 billion compared with $1.16 billion a year ago, largely on the back of aggressive cost cuts this year. Uber shed roughly a quarter of its staff during the pandemic.

In February, Chief Executive Dara Khosrowshahi vowed to make Uber profitable on an adjusted basis before interest, taxes, depreciation and amortization before the end of the year. As the health crisis deepened, however, he pushed reaching that milestone to the end of next year. The company reiterated its profitability target on Thursday.

Uber’s adjusted loss excluding those items widened to $625 million for the third quarter from a loss of $585 million in the same period a year ago.

The results were in line with Wall Street’s already muted expectations. Analysts surveyed by FactSet had forecast on average a net loss of $1.01 billion and adjusted Ebitda loss of $600 million.

Earlier this week, Uber won one of its biggest regulatory battles. The ride-sharing giant combined forces with companies including Lyft Inc. and DoorDash Inc. to mount California’s costliest ballot-measure, which asked voters to exempt them from a state law seeking to reclassify their drivers as employees. Voters overwhelmingly supported the measure.

The reclassification would have upended Uber’s operations in its home state and set a precedent for other states challenging its business model.

*CELLNEX CONVERTS ORDERS BELOW 0.75% COUPON RISK MISSING: TERMS

*CELLNEX CONVERT ORDERS BELOW 1.375% YTM RISK MISSING OUT: TERMS

*CELLNEX DELTA ORDERS BELOW EU57.10/SHR RISK MISSING OUT: TERM

• Notes are marketed with a coupon range of 0.25% to 0.75% and a fixed conversion premium of 70%: terms
• Bonds have a yield-to-maturity range of 0.875% to 1.375%: terms
• Proceeds for general corporate purposes, including financing of M&A: terms
• Concurrently, about EU300m of existing shares are offered in a delta placement to cover short sales for and on behalf of buyers of the equity-linked bonds, who wish to hedge the market risk of participating in the deal: terms
• JPMorgan, BNP Paribas, Goldman Sachs, Morgan Stanley are joint global coordinators: terms
  • Credit Agricole, HSBC, Jefferies, Societe Generale joint bookrunners

UniCredit/bank M&A: dealpolitik

Politicians and central bankers seek to consolidate this fragmented sector

The role of factotum, a fixer to the powerful, is risky. No wonder Jean Pierre Mustier of UniCredit is resisting calls to do some fixing for the Italian government by taking over a weaker lender. Pressure may be growing. Pier Carlo Padoan, a former Italian finance minister, was recently anointed as UniCredit’s next chairman.

Little imagination is needed to envisage board meetings in which Mr Padoan extols smaller Monte dei Paschi di Siena as an M&A target. He led the 2017 bailout of the lender, which Italy’s government plans to return to full private ownership. Similar conversations are going on across Europe, as politicians and central bankers seek to consolidate this fragmented sector.

One can see why Mr Mustier might be unenthusiastic. UniCredit has lots of capital, as third-quarter results underlined. The Frenchman wants to return a big chunk to shareholders. He had not planned on using the money to blot out the bad lending decisions of others. Even so, a deal may be do-able involving Monte dei Paschi or Banco BPM, Italy’s third-largest lender.

UniCredit ended the third quarter with core equity tier one capital at 14.4 per cent of risk weighted assets. That was a hefty 538 basis points over a key regulatory minimum. The bank is well provisioned against loan losses.

Even allowing for tougher regulation, UniCredit should have more than €4bn which it could theoretically return to shareholders in the next couple of years, estimates Andrea Filtri of Mediobanca. That is on top of anticipated dividends of €2.8bn. But there’s the rub: the European Central Bank has banned payouts. That is one reason UniCredit has a market worth of only €16bn.

A change in ECB policy — and better returns from UniCredit’s diverse core businesses — would change that. An injection of cheap equity would help too. If Italy wants to shed state-controlled banking assets, Mr Mustier should demand low prices. “My lord may go dancing, but I’ll call the tune,” sang Figaro, the most famous of factotums.