London & Manchester `in merger talks with rival'

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The Independent Online
London & Manchester is believed to have held merger talks last week with Britannic, one of its main rivals in the life insurance business, according to sources.

L&M yesterday refused to discuss the rumours. However, there was strong speculation in the City that a deal was in the offing, which pushed up L&M's share price by 5 per cent to 514p, valuing the company at pounds 630m. Swinburne Johnson, L&M's company secretary, said simply: "It is company policy never to comment on takeover rumours".

According to the sources, Britannic executives have been consulting institutional investors which own substantial stakes in Britannic, with a view to gaining their approval for the merger.

City analysts yesterday said a merger between the companies, which both use door-to-door sales people to sell life insurance products, was a likely prospect in a sector that is undergoing rapid consolidation.

Britannic this year gained the sanction of the Department of Trade and Industry to assign "orphan assets" from its long-term funds to shareholders. The assets, which can be used as security to borrow money for a takeover, are now worth more than pounds 1bn. Britannic is worth pounds 1.95bn on yesterday's closing price of pounds 10.06, up 9p.