Hanover Insurance Group's 53.3p per share offer accepted by Chaucer
US insurance firm Hanover has agreed a deal to buy Chaucer for £313m.
Hanover, through its subsidary Tessera Limited, will offer Chaucer shareholders 53.3p a share and 2.7p in cash for each Chaucer share as a final dividend for the year ended December 31.
The deal represents 1.09x Chaucer?s reported net tangible assets as at 31 December 2010; and 1.26x Chaucer?s pro forma net tangible assets as at 31 December 2010, adjusted for the effects of catastrophe losses announced by Chaucer in 2011.
Hanover has already received confirmation that 23.59% of Chaucer's shareholders will vote in favour of the deal. The rest of the shareholders are expected to accept the offer.
Hanover is based in Worcester, Massachusetts, and has an equal share of both personal lines and commercial lines business. It had an end of period book value in 2010 of $2.46bn. Hanover made a profit of $154.8m last year.
The buyout is the final chapter in a long-running saga which saw a long line of potential bidders including private equity tycoon Guy Hands, US private equity firm TPG and Goldman Sachs, Novae and Brit.
Hanover chief executive and President Frederick H. Eppinger said: “The combined organisation would provide both companies with the benefits of greater scale, earnings diversification, and expanded market presence. Chaucer would enable us to further advance our specialty strategy, given its recognised expertise in underwriting energy, marine and aviation risks."
Chaucer chairman Martin Gilbert said: “The acquisition price in cash is attractive for shareholders, a significant proportion of whom are explicitly supporting the transaction. In addition, Chaucer’s clients, staff and other stakeholders are expected to benefit from the combination’s greater scale, diversity and capital resources.”
Chaucer chief executive Bob Stuchbery said: “Under the ownership of The Hanover, we expect that we will be able to build on The Hanover’s market position, and access attractive specialty business through its strong US retail distribution. Overall, this is a great cultural fit that brings together two businesses with the same ambition and complementary strengths, and will create an excellent platform for future profitable growth.”
Chaucer’s shares rose 2.8 percent to 55.5 pence in London trading this morning, giving the company a market value of 304 million pounds.
Chaucer’s pre-tax profits dropped 20% in 2010 from the year earlierto £22.5m.