Counterbids expected to delay deal

Regulatory rules and counterbids are delaying Brit’s reported takeover of Chaucer.

Insurance partner at Deloitte Ian Clark said that as Chaucer was a public company, it had to go through a process that left room for counterbids. Its board then had to consider those bids.

Brit and Chaucer both refused to comment.

Other analysts said Chaucer’s poor investment returns made it an attractive takeover candidate. According to Finncap, the Lloyd’s syndicate last year had a negative return of 6.8%, largely because of its investments in equities and hedge funds. Clark said the investment loss suppressed value which attracted bidders. “They feel that they can get hold of a good and strong business at a good price,” he said.

Separately, specialist investment manager Pamplona Capital Management will take a 29.9% stake in Chaucer, subject to investor approval, through a partial cash offer.

Pamplona partner Paul Thompson said regulatory rules prevented it from acquiring a larger stake. “It’s the right sort of investment for the size of our fund – it’s also the magic number that stops short of us having to make an offer for the whole company.”

In a statement Chaucer said its board would continue discussions with all parties, including Pamplona.

First quarter figures show that total GWP at Chaucer increased by 42.8% to £257.8m from £181.2m in the first quarter of 2008.