Admiral pulls sale of Confused.com

The insurance company Admiral has cast a shadow over the forthcoming flotation of Moneysupermarket.com by announcing it had decided not to sell Confused.com, its rival price-comparison service. Admiral said yesterday that despite attracting interest from a number of private equity bidders, no one had offered it a sufficiently attractive price for the minority stake it was prepared to sell.

The announcement follows Admiral's admission earlier this year that it had received a number of approaches from private equity groups eager to invest in Confused.com, which is number two to Moneysupermarket.com in the price comparison market.

Yesterday, however, the insurer said that these groups had made offers that would value Confused.com at between £600m and £650m, a little below the £700m at which City analysts have said the company could be worth. Admiral also said it was concerned that private equity groups would expect a leading role in the operation of Confused.com.

A spokesman for Admiral said: "It is for these reasons that the board at present believes it is in our shareholders' best interests for the group to retain a 100 per cent interest in Confused.com and continue to follow our clearly defined growth strategy for the business."

The announcement hit Admiral's share price, which fell 28p to 862p, a drop of more than 3 per cent. However, the company insisted it had never solicited approaches for Confused.com, which specialises in the motor insurance sector, and said it was entirely happy to retain full ownership of the business.

City experts warned that Admiral's inability to secure a full price for Confused.com could be a warning sign for potential investors in Moneysupermarket.com, which on Wednesday announced a price range for its flotation that valued the company at up to £1.04bn.

Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers, said: "There are already shades of dotcom-style speculation around Moneysupermarket.com and the other concern is that their business model is so easy to replicate, with very low barriers to entry. The market is looking at this as a speculative investment."

However, Moneysupermarket.com's advisers insisted that Admiral's indications of the sort of offers it has attracted for Confused.com would actually give investors comfort. One insider at the company said: "Our offer has been priced to go and Admiral's announcement is actually quite supportive."

A price tag of £625m at the mid-point of offers received would value Confused.com at around 14.9 times its forecast earnings before interest, tax, depreciation and amortisation (Ebitda) for 2008. By contrast, the mid-price of the Moneysupermarket.com price range suggests a valuation of only 14.4 times Ebitda, advisers to the company pointed out.

The Moneysupermarket.com valuation is also broadly in line with the £210m paid by Scripps, the US data giant, when it bought uSwitch, a specialist in utility price comparisons, last year.

After the flotation, Moneysupermarket.com will be 57 per cent-owned by Simon Nixon, the company's chief executive, who founded it in 1989. It emerged yesterday, as Moneysupermarket.com published its prospectus before the flotation, that Mr Nixon earned a £15m bonus last year.

The company said it believed it would be able to continue growing its business in the UK and overseas, despite threats from new entrants to the price comparison business.