L&G rallies as potential bidders said to be running the rule over the business

(Sharecast News) - Legal & General shot to the top of the FTSE 100 on Thursday following a report that potential bidders, including insurers and alternative asset managers, had been running the rule over the business. The Financial Times quoted a US private capital executive as saying that it was "getting pretty real" as far as groups drawing up plans to bid for L&G. "People are spending real money on this now," the source said.

Meanwhile, an L&G insider told the FT: "It feels like we're being dressed up for a sale."

Core businesses, such as index funds in the asset management arm, were "keeping the lights on", they said. "But they know they've got a structural problem and they are trying to throw everything at it."

Private capital executives told the FT that there were a host of strategic alternatives open to L&G, from selling off blocks of its insurance portfolio to offloading assets to reinsurers. It could also find a private capital partner to assume some of its pension risk transfer assets, as rival Standard Life has been exploring.

The FT also cited four people familiar with the discussions as saying that potential bidders have considered a full takeover of L&G, although any such transaction would be challenging and politically sensitive due to the size of L&G and its large holdings of gilts.

But chief executive Antonio Simoes told the FT he was not considering a break-up or sale.

"There's no discussions or anything else going on," he said. When asked if L&G had been approached, he added: "I am 100% focused on executing my strategy."

At 0910 BST, L&G shares were up 5.2% at 261.50p.