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Brit Insurance Holdings NV's acceptance of a cash offer by Achilles Netherlands Holdings BV might appear to herald more insurance M&A activity.
But upon closer inspection the Brit deal may simply be a special case, and not an indicator of more M&A activity to come.
Under the deal terms, announced Oct. 26, Brit Insurance will receive £10.45 per share in cash from Achilles, a newly incorporated unit of funds associated with Apollo Management VII LP and CVC Capital Partners Ltd. There will also be a contingent value payment of up to 25 pence per share, plus a 30-pence-per-share capital distribution payable Dec. 7. The deal adds up to a total valuation of £888 million ($1.39 billion).
The price seems attractive to observers. Thomas Dorner, an analyst at Oriel Securities Ltd, said of the acquisition: "I think it's a good deal for both parties. For Brit, because they have been trading at a huge discount for a long period of time, and for Apollo because they can buy an asset that has already begun to improve, at 1x net tangible asset, so they don't have to pay a premium for it."
"The likelihood is that the background is quite supportive for M&A. Most of the companies are undervalued and have lots of capital," he said.
The deal comes the...