Zurich’s £5.6 billion pound takeover of RSA has collapsed

Zurich’s £5.6 billion takeover of rival insurance company RSA has collapsed.

The decision to pull out was made after the Swiss company disclosed a £177 million hit from Chinese storage station explosions last month.

A takeover looked almost certain a few weeks ago when RSA said that it was willing to recommend an offer to its shareholders.

According to Zurich, talks about a deal “have now been terminated, and that Zurich does not intend to make an offer” to buy RSA.

Shares in RSA fell by more than 20.84%, or 106.20 points, on Monday – wiping over £1 billion off its market value. Shares in the company were climbing up on news of a deal, which valued the company at 550p a share, however, once the deal collapsed the value dropped from over 500p to around 400p.

In a statement RSA said: “As a result of recent deterioration in the trading performance of Zurich’s general insurance business, Zurich has terminated discussions with RSA regarding a possible offer.

“Zurich has confirmed to RSA that the due diligence findings were in line with their expectations and, while the process had not been finally concluded, they had not found anything that would have prevented them from proceeding with the transaction on the terms announced on 25 August 2015.

“Zurich’s interest in acquiring RSA, which was announced on 28 July 2015, was unsolicited. Since that time, RSA has continued to make good progress in the delivery of its Action Plans, as evidenced by our half year results. Trading results for July and August have been positive and ahead of our expectations. Additionally, we have announced the sale of our Latin America business, the principal outstanding piece of our strategic refocus programme.

“The Board and management of RSA look forward to the future with confidence in its prospects and to next updating the market at the Q3 interim management statement on 5 November 2015.”


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