Bankers set for fees bonanza as takeover frenzy hits the City, with RSA deal sparking takeover speculation over Aviva and Hiscox
Bankers are seeing a deal frenzy in London
(Getty Images)The boom in London takeovers and fees for investment banks gathered pace as a £7 billion bid for insurance giant RSA was followed today by deals in the property, food and tech sectors.
RSA’s takeover deal last night sparked hopes of more deals in the insurance sector, driving up shares in Aviva and Hiscox.
Elsewhere, the Wellcome Trust’s investment arm snapped up property group Urban & Civic for £506 million and Mr Kipling cakes owner Premier Foods sold Hovis to private equity group Endless. Sportech, the betting technology firm behind The Tote, received a bid from a US hedge fund and cyber security giant Aveva launched a £2.84 billion rights issue to fund its $5 billion deal to buy America’s OSIsoft.
The wave of takeover interest in London firms is controversial, as some shareholders fear their companies are being bought on the cheap.
Some feel the RSA offer undervalues the business, and Sportech rejected its suitor this morning.
G4S is fighting off a takeover effort from GardaWorld for the same reasons, while McCarthy & Stone’s board has come under fire for accepting a takeover offer some say undervalues the retirement homes builder. McCarthy investor Royal London has gone public with its concerns,
But the merger trend looks set to continue. That has underpinned share prices and triggered big fees for City banks and advisers working on them.
The RSA deal will trigger millions of pounds in fees for bankers as the deal is complex, involving two bidders who will break the business up.
Robey Warshaw, Goldman Sachs and Bank of America are advising RSA. Barclays is advising Canadian insurer Intact, which is taking over the Canada, UK and International operations. Morgan Stanley is advising Denmark’s Tryg, which will take on the Swedish and Norwegian businesses.
Analysts said Aviva’s advisers at Citigroup and JPMorgan Cazenove would likely now be standing by for potential approaches for parts or all of the business.
Aviva is in the process of exiting overseas operations under new chief executive Amanda Blanc and recently sold its Singapore arm although Blanc has ruled out calls in some quarters for it to break up its life and general insurance units.
On RSA, analysts such as Shore Capital have said the bid price is fair.
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