7 October 2016Insurance

Delta Lloyd rejects NN Group's takeover proposal

The Delta Lloyd supervisory and executive boards have rejected NN Group's takeover proposal as the company believes that the financial terms and conditions set out in NN Group's proposal are not satisfactory.

Netherlands-based NN Group made a conditional proposal for a possible cash offer for Delta Lloyd at a price of €5.30 per ordinary share on October 2, valuing the Dutch competitor at €2.4 billion.

The proposal substantially undervalues Delta Lloyd, its prospects and its strategic opportunities, according to Delta Lloyd. The premium of 29 percent to the closing price of October 4, 2016 is below market norms for cash transactions of this type and for companies at its stage of recovery, according to a press release. The premium is only 11 percent when compared to Delta Lloyd's undisturbed 6-month high share price of €4.79, the company argues.

The Delta Lloyd boards believe that the firm is a strong business with a compelling strategy and a clear path to value creation on which it is showing good progress.

Following a challenging period, Delta Lloyd has made strong progress on stabilising its balance sheet and implementing its strategy including in recent days the announced merger of Delta Lloyd's life businesses in The Netherlands and Belgium, according to the press release.

Consistent with their fiduciary responsibilities, the board of Delta Lloyd is not opposed to transactions that would create compelling value for shareholders and deliver benefits to other stakeholders, according to the statement.

Overall, the boards are of the opinion that the financial terms and conditions set out in NN Group's proposal do not form an acceptable basis for such a transaction.

Delta Lloyd admits that the benefits of combining Dutch insurers are significant. These benefits include cost synergies, avoided investment and project spend, capital and financing synergies. However, the boards believe that Delta Lloyd shareholders are in a position to benefit from the value of these synergies through a number of possible combinations now or in the future. NN Group's proposal does not deliver an adequate share of this value for Delta Lloyd's shareholders, according to the statement.

CreditSights analysts, who see Delta Lloyd’s economic value at €5.2 billion, expect NN Group to return with a revised offer.

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More on this story

Insurance
5 October 2016   Dutch NN Group intends to make an all-cash offer for all issued and outstanding ordinary shares of Delta Lloyd, valuing the Dutch competitor at €2.4 billion, a premium of approximately 53% over the last three-months average closing price of the stock.
Insurance
7 October 2016   NN Group's takeover approach to Delta Lloyd reinforces Fitch Ratings' expectation that M&A insurance activity in Europe will accelerate, as well-capitalised firms seek growth through acquisition of rivals hit harder by Solvency II.
Insurance
2 November 2016   NN Group, a Dutch insurance and asset management company, has said that it still wishes to make a public offer for all issued and outstanding ordinary shares of its rival, Delta Lloyd.