French insurance group Axa won the battle for British composite insurer Guardian Royal Exchange - which owns Ireland's largest general insurer, Guardian PMPA - with an agreed offer valued at around £3.4 billion sterling (€4.92 billion). Axa, based in Paris, with operations throughout Europe, will buy GRE through its British arm Sun Life and Provincial Holdings Plc in which it has a 71.6 per cent stake. The deal ends fears of a further rationalisation in the insurance sector in Ireland, as Axa is not a major player in the Irish market.
The acquisition will have no major effects on the Irish staff at Guardian, said a spokesman for the company yesterday. AXA had made clear its intention to retain the business.
AXA has a small presence in the Irish market by providing commercial insurance through Colonia, which is a branch of AXA Colonia Vericherung AG.
It also operates two companies at the International Financial Services Centre in Dublin, AXA Colonia Insurance (Ireland) and AIM Associated Insurance Management.
Under the agreed terms, GRE shareholders will receive 249p sterling in cash and 0.243 new Sun Life shares for each GRE share, valuing GRE stock at around 389p. With its offer unanimously recommended by GRE directors, Axa pulled off a coup against tough competition from its British rival Royal & Sun Alliance Insurance Group Plc and the pan-European mutual group Eureko. Both Royal & Sun Alliance and Eureko have substantial operations in Ireland. Sun Life will ultimately retain only GRE's British and Ireland operations for a net consideration of £1.88 billion sterling. Its British arm is to sell GRE Overseas to Axa for £972 million in cash. It will also sell the German operations, GRE Germany, to AXA Colonia, which is 73 per cent owned by Axa, for 1.66 billion marks, while the US business, GRE US, will be sold to Liberty Mutual for $1.465 billion. GRE will spend £292 million to repay external foreign-denominated debt.
Sun Life said the deal would enhance earnings in 1999 and thereafter while Axa forecast it would dilute earnings slightly in 1999 but would be neutral in 2000 and positive in 2001.
