Britannic back in the bid spotlight

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The Independent Online

Britannic, the troubled insurer that recently lost its managing director, was the subject of intense takeover speculation yesterday, with some in the City expecting an announcement from the company within weeks.

Industry sources were yesterday anticipating a move by a European insurer for the company. Old Mutual is also understood to be reviving its interest in the insurer, which had to scrap its dividend as well as close to new life insurance business this year.

The South African insurer is believed to have made an approach to the Britannic team some weeks ago, but the offer was rebuffed and talks broke down. Old Mutual also had concerns over the possibility of spiralling liabilities in Alba Life, one of Britannic's with-profits funds. Bob Head, who joined Old Mutual in April as strategy director, is understood to be leading a team intent on making a fresh approach.

There may also be competition in the bidding ring from Friends Provident, which is also understood to be taking a serious look at Britannic's business.

Britannic's management was thought to be unwilling to sell earlier in the year while its share price remained so depressed. Shares hit a low of 101p in March, making its market capitalisation £196m, while its embedded value was in the region of £950m.

But the succession of its finance director Paul Thompson, the former corporate financier from Merrill Lynch, to the top job at Britannic has revived hope of a deal.

Shares in Britannic have been steadily rising in the past three months. But in the past week alone, shares in Britannic have surged more than 15 per cent. A takeout price is likely to be in the region of 300p a share. Shares yesterday closed at 268p, making the company worth £526m.