RSA rises on takeover speculation

RSA Insurance Group reached its highest level in a month in London trading yesterday amid speculation a competitor may make a takeover offer. The stock has rallied 9.3 per cent this week as analysts at UBS and Berenberg cited the company as a potential takeover target.

The insurer is today scheduled to release the findings of a review by PricewaterhouseCoopers into accounting irregularities at its Irish unit.

The share gain is a “combination of the company going some way into drawing a line under Ireland and speculation about a bid target which reminds investors there is real value in the business,” said Hari Sivakumaran, an analyst at Oriel Securities in London.

The shares sank 27 per cent in 2013, erasing about £1.3 billion of market value, after the London-based insurer issued three profit warnings in the fourth quarter and injected about £200 million into the Irish unit to help plug a shortfall.

It closed up 3 per cent at 100.7p yesterday, the highest level since December 6th.

Berenberg's Matthew Preston said there was "theoretical merit" in Aviva making an approach for RSA that would help it establish market leadership positions.

UBS's James Shuck said a takeover and break-up of RSA remained a possibility, citing Finland's Sampo Oyj as a potential "orchestrator." A spokesman at RSA declined to comment on the speculation. Officials at Aviva and Sampo were not available to comment. – (Bloomberg)