Brit asks Apollo for £865m
BRIT Insurance boss Dane Douetil has demanded a takeover offer of at least £11 per share from US buyout player Apollo before he will grant access for due diligence, according to sources.
The FTSE 250 insurer raised the stakes in a game of brinksmanship with Apollo on Friday, rejecting an indicative approach of £10.50 per share, or £824m. Brit said an offer at that level “undervalues the company and, accordingly, would not represent a basis on which the board is prepared to engage”.
Douetil has briefed market participants that he would be prepared to open Brit’s books at a minimum indicative offer of £11 per share, or £865m. Apollo has made it clear it is more value-orientated than a trade buyer as it will not immediately be able to squeeze out synergies by cutting back-office expenses.
One analyst said Douetil and his chairman, John Barton, had no personal incentive to negotiate a sale of the business because they would be likely to depart following an Apollo takeover. They have the support of top-10 shareholders, however, including Schroders and Fidelity, to hold out for a higher offer.
Analysts believe Brit’s shares would fall back to the £8 level should Apollo walk away from a deal. Brit’s paper closed 3p down at 897p.
On Friday, Ben Cohen at Collins Stewart wrote: “We think there is a real risk now Apollo walks away.”