Amlin plc
Highly attractive offer for Amlin
Our view: The recommended cash offer for Amlin by Mitsui Sumitomo
represents strong value for shareholders, in our view, at the highest
takeout multiple seen in the sector in recent times. We see no obstacles
to the deal going through. Increase PT to 675p and upgrade to Sector
Perform.
Key points:
Yet more interest in the Lloyd's space
Amlin has become the latest of the Lloyd's insurers to become subject to
bid interest, following deals for Catlin and Brit that were both concluded
earlier this year.
Recommended cash offer of 670p
This morning, Mitsui Sumitomo and Amlin announced that they have
reached agreement on a cash offer for the entire issued share capital of
Amlin. The offer values Amlin at £3,468m and represents a 36% premium
to the closing price of Amlin on 7th September 2015.
The deal is backed by some of Amlin’s largest shareholders
Mitsui Sumitomo has received irrevocable undertakings to vote or procure
votes in favour of the deal representing 15.2% of Amlin’s issued share
capital. As a result, we do not foresee any obstacle to the deal going
through at the offer price.
We believe the deal represents strong value for shareholders
The deal based on the offer multiple is 2.4x Amlin’s 1H15 net tangible
assets, and 2.3x our 2015E net tangible assets. At this multiple, based on
our analysis of other comparable deals, the deal represents the highest
multiple that we have seen for a Lloyd’s and London market business in
recent years.
Increasing price target to 675p, and upgrading to Sector Perform
Following 1H15 results, we update our estimate to take into account yearto-
date performance. We increase our 2015E EPS by 7.6%. We upgrade
to Sector Perform as we no longer see any reason for the stock to
underperform. We base our valuation on the recommended