Beazley rallies as Zurich Insurance discloses 1.5% stake

(Sharecast News) - Beazley rallied on Monday as Zurich Insurance disclosed a stake of just under 1.5% in the London-listed insurer, after recent takeover approaches were rejected. Zurich said in a filing that as of 30 January, it holds just over 8.86m shares in Beazley.

On 22 January, Beazley said it had rejected a £7.7bn takeover offer from Zurich as it "materially undervalues" the company and its longer-term prospects. The 1,280p a share cash offer followed an earlier approach made by Zurich on 4 January at 1,230p a share, which was rejected on 16 January.

Beazley said in its statement on 22 January that it had received three proposals from Zurich in June last year and engaged with the company "appropriately", including providing it with certain limited due diligence information "in a good faith effort to come to a shared understanding of value".

It pointed out that the terms of Zurich's latest proposal were below the proposal made in late June last year and rejected by Beazley. It valued the group at 1,315p per share at an implied equity value of £8.4bn.

Beazley shares closed up 3.1% at 1,168p.

Danni Hewson, head of financial analysis at AJ Bell, said: "Shares in insurer Beazley edged up towards previous record highs following a disclosure from suitor Zurich that it's built up a small stake in the company.

"Zurich has been clear that its sights are set on the smaller company and has a couple more weeks to come up with an offer that might win over Beazley's board and major shareholders. Whilst the clock ticks Zurich has taken a toehold in its prize and speculation will be mounting that it could be on its way to notch up a far bigger stake than the 1.47% it has disclosed.

"If it can amass a sizeable position, it will achieve two goals: persuading the board it needs to look again and reducing the overall cost of acquiring control, since whatever offer it makes would undoubtedly be at a significant premium to today's price."