One of Britain’s oldest companies is set to be broken up after a £7.2billion takeover by foreign competitors.
RSA Insurance Group, which dates back to 1706, has recommended that its shareholders approve a joint 685p per share offer from rivals Intact of Canada and Tryg of Denmark.
The sale of the company, which owns More Than and underwrites home and pet insurance for the likes of Tesco and John Lewis, stands to net chief executive Stephen Hester up to £15.8million.
Takeover offer: RSA Insurance Group has recommended that shareholders approve a joint 685p per share offer from rivals Intact of Canada and Tryg of Denmark
If the deal goes through, he will leave with his windfall, and could go on to get another heavy-hitting job elsewhere.
As Hester hailed a ‘sad but proud’ moment for RSA, critics urged shareholders to think twice before voting it through as the country faces losing one of its oldest and largest companies.
Alexander Stafford, a Tory MP who sits on the Business Select Committee, said: ‘RSA is one of the jewels of British business and should be kept on the London Stock Exchange.
‘Modern insurance was invented in Britain, and one of its giants, RSA, should remain listed in the UK.’
As it stands, the deal will involve, potentially, hundreds of job losses.
RSA will not need corporate headquarters in the UK, meaning chunks of workers in its office on London’s Fenchurch Street could be out of a job.
It’s a good day for two Stephens: Tycoons rake in millions
RSA boss Stephen Hester, left, stands to make up to £15.8m if the RSA sale goes ahead. Stephen Lansdown, right, sold £103m worth of shares through his firm PHL Limited
RSA boss Stephen Hester stands to make up to £15.8million if the sale to Tryg and Intact goes ahead.
The 59-year-old will rake in a windfall from selling shares he owns outright and others he could get through bonus schemes, which he has collected in nearly seven years at the firm.
But this is a fraction of the amount which Hargreaves Lansdown (HL) co-founder Stephen Lansdown pocketed yesterday when he offloaded a stake in the investment platform he helped to build.
The now-retired entrepreneur sold £103million worth of shares through his firm PHL Limited, taking his holding in HL from 7.1 per cent to 5.7 per cent.
Lansdown, 68, has an estimated fortune of £1.35billion after co-founding the platform back in 1981 with his business partner Peter Hargreaves.
He owns the Bristol Bears rugby team, basketball team Bristol Flyers and Bristol City Football Club, as well as stakes in a Botswanan luxury safari and a golf course in low-tax Guernsey, where he moved in 2010.
Lansdown has sold HL shares worth more than £225million so far this year, and sold £171million worth just weeks before the Neil Woodford scandal hit last year.
Hester, meanwhile, pointed out that he had never sold any of his shares in RSA before. The US-born executive sealed his reputation as a serial deal maker after joining Abbey National in 2002.
First as finance director and then as chief operating officer, he helped to iron out Abbey’s problems and was instrumental in its sale to Santander in 2004.
He then joined British Land as its boss, before moving to become chief executive of RBS (now Natwest) in the aftermath of the financial crisis.
In an attempt to ease concerns, Hester said: ‘Our corporate headquarters is less than 150 people, and I think quite a few of those people will be needed as some of the functions move into our UK business that were previously done corporately. So I expect the number of direct redundancies in the UK to be very modest.’
Intact will buy RSA’s Canadian and UK operations while Tryg will take the Swedish and Norwegian businesses. They will each own half of RSA’s Danish arm.
But where there is too much overlap, Intact and Tryg will also be shaving off jobs.
Following the merger, Intact plans to cut up to 2 per cent of its workforce in Canada and Tryg intends to axe between 10 per cent and 15 per cent of the staff in its Norway and Sweden businesses.
RSA must still persuade its shareholders to approve the deal. Its largest shareholder, Swedish investment firm Cevian Capital which owns a 14 per cent stake worth £1billion, has already agreed to sell.
And Hester, who said he had done everything that he planned to improve the company, urged shareholders not to brush off the £7.2billion price tag.
He said: ‘We were in no way soliciting or looking for a deal. This position did enable us to strike a hard bargain, so when the offerors first came calling in the middle of August – and I had had contact with both of them independently over a number of prior years – while it was not a situation that we had sought, we did feel in a very strong position to say that we’re not going to give up our independence unless it is for a truly premium value.’
He added that RSA was now a strong business, following the turnaround he led after joining in 2014.
He said: ‘The offer is one I regard with a mixture of sadness and pride. Sadness because it will mark the end of a chapter for RSA.
‘Pride because I believe this is happening out of strength, because others recognise what a fine company RSA has become.’
RSA was founded more than 300 years ago in the aftermath of the Great Fire of London. When it listed on the stock market in 1983, it was worth just £451million, but is now on the FTSE 100 index.
It employs around 14,000 people and has more than 9m customers across 100 countries.
Tryg boss Morten Hubbe said it was ‘very unique’ to be able to buy a company of RSA’s quality. The sale was ‘a tough nut to crack’, especially as negotiation was done over the internet, he said.
If shareholders agree a deal, another business willl leave Britain’s FTSE 100 index of leading companies. Since the pandemic caused prices to tumble, buyers have been circling firms such as G4S, William Hill and LV.