Sampo Explores Offer for $1.7 Billion U.K. Insurer Hastings

(Bloomberg) -- Finnish insurance group Sampo Oyj is exploring an entry into the U.K. market with a potential bid for general insurer Hastings Group Holdings Plc.

Sampo and Hastings’s biggest shareholder, Rand Merchant Investment Holdings Ltd., have approached the London-listed insurer about a possible cash offer, according to a statement Wednesday confirming an earlier Bloomberg News report. Hastings is in talks with the consortium and has formed an independent board committee to consider any deal, it said in the statement.

Shares of Hastings jumped as much as 20% on Wednesday in London, an intraday record. The stock was up 14% at 4:13 p.m., giving Hastings a market value of about 1.3 billion pounds ($1.7 billion).

“Sampo operates like a conglomerate. Thus owning a standalone U.K. motor insurer makes sense as another leg,” Kevin Ryan, an analyst at Bloomberg Intelligence, said by email Wednesday.

A takeover of Hastings would be the largest of a U.K.-listed company this year, according to data compiled by Bloomberg. It would also surpass the acquisition of Axa SA’s central European businesses by Uniqa Insurance Group AG as the biggest deal in the European insurance industry in 2020, the data show.

There’s no certainty that a firm offer will be made, Hastings said. Sampo continuously considers various strategic options to accelerate its growth and diversify its earnings profile, it said in a separate statement. The Finnish company has a “strategic ambition” to further expand in non-life insurance, a segment where it has extensive experience, according to the statement.

RMI, a South African firm that invests in insurance companies, acquired almost 30% of Hastings in 2017. Goldman Sachs Group Inc.’s private equity unit has been selling down its stake in the U.K. insurer for years, after initially investing before the company’s 2015 initial public offering.

Hastings, founded in 1996, offers mainly car and home insurance policies to more than 2.7 million customers in the U.K., according to its website. Its shares have performed poorly since listing and closed Tuesday unchanged from the company’s IPO price.

Sampo has a market value of about $21 billion in Helsinki. Its stable of insurance companies currently offer property and casualty insurance as well as life insurance and wealth management across the Nordic and Baltic regions, according to Sampo’s website. Sampo also owns about 20% of lender Nordea Bank Abp, according to data compiled by Bloomberg.

European companies have been involved in $21 billion of mergers and acquisitions this year in the insurance industry, which has suffered a less severe fall in dealmaking amid the coronavirus pandemic, according to data compiled by Bloomberg.

JPMorgan Chase & Co. is advising Sampo and RMI on the potential transaction. Barclays Plc, Fenchurch Advisory Partners LLP and Numis Securities Ltd. are working with Hastings, according to the statement.

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