RSA Insurance Group has recommended that its shareholders approve a joint 685p per share offer from Intact and Tryg
One of Britain’s oldest companies is set to be broken up after a £7.2billion takeover by foreign competitors.
RSA Insurance Group, which dates back to 1706, has recommended that its shareholders approve a joint 685p per share offer from rivals Intact of Canada and Tryg of Denmark.
The sale of the company, which owns More Than and underwrites home and pet insurance for the likes of Tesco and John Lewis, stands to net chief executive Stephen Hester up to £15.8million.
If the deal goes through, he will leave with his windfall, and could go on to get another heavy-hitting job elsewhere.
As Hester hailed a ‘sad but proud’ moment for RSA, critics urged shareholders to think twice before voting it through as the country faces losing one of its oldest and largest companies.
Alexander Stafford, a Tory MP who sits on the Business Select Committee, said: RSA is one of the jewels of British business and should be kept on the London Stock Exchange. Modern insurance was invented in Britain, and one of its giants, RSA, should remain listed in the UK.
As it stands, the deal will involve, potentially, hundreds of job losses.
RSA will not need corporate headquarters in the UK, meaning chunks of workers in its office on London’s Fenchurch Street could be out of a job.
In an attempt to ease concerns, Hester said: Our corporate headquarters is less than 150 people, and I think quite a few of those people will be needed as some of the functions move into our UK business that were previously done corporately. So I expect the number of direct redundancies in the UK to be very modest.
Intact will buy RSA’s Canadian and UK operations while Tryg will take the Swedish and Norwegian businesses. They will each own half of RSA’s Danish arm.
But where there is too much overlap, Intact and Tryg will also be shaving off jobs.
Following the merger, Intact plans to cut up to 2 per cent of its workforce in Canada and Tryg intends to axe between 10 per cent and 15 per cent of the staff in its Norway and Sweden businesses.
RSA must still persuade its shareholders to approve the deal. Its largest shareholder, Swedish investment firm Cevian Capital which owns a 14 per cent stake worth £1billion, has already agreed to sell.
And Hester, who said he had done everything that he planned to improve the company, urged shareholders not to brush off the £7.2billion price tag.
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