Speculation surrounding the future of personal lines insurer esure Group plc has ended, as the Surrey-headquartered provider confirms it is being snapped up.
“The board is pleased to have reached agreement with Blue (BC) Bidco Limited, a wholly owned subsidiary of funds managed by Bain Capital Private Equity (Europe) LLP on the terms of a recommended all-cash offer for the entire issued and to be issued ordinary share capital of esure Group plc by Bidco,” said the British firm when it announced not only the £1.2 billion proposed acquisition but also its interim results for the first half of the year.
Under the agreed terms, esure shareholders – including chair Sir Peter Wood – will be entitled to receive 280 pence in cash for each share held. That’s about 37% higher than the closing price of 204 pence on August 10. Wood, according to the BBC, will make £360 million from the sale – £50 million of which he will reinvest into the insurer he founded in 2000.
Bidco, meanwhile, has announced its firm intention to make an offer under Rule 2.7 of the Takeover Code. Esure’s board, in turn, is not recommending the payment of an interim dividend.
Calling the proposed acquisition “a great outcome” for shareholders, the company, and customers, Wood stated: “Since its IPO in 2013, esure has grown to nearly 2.5 million in-force policies, delivered more than £800 million of annual gross written premiums, and returned just under £300 million to shareholders in dividends as well as the considerable value delivered to shareholders through the demerger of GoCompare.”
In the first six months of 2018, however, esure’s pre-tax profit of £36.1 million was lower compared to the £45.1 million posted in the same period last year. The decline was attributed to a £14 million hit from adverse weather-related claims costs in the home and motor accounts.
The good news is, according to interim chief executive Darren Ogden, esure “remains well placed to continue delivering profitable growth” this year.