Shares in Sun Life & Provincial Holdings rose sharply yesterday after Axa, the insurance giant, agreed to pay £2.4bn to buy out the 44 per cent of the UK insurance holding company it does not already own.
The price of 500p a share plus a 5p dividend was substantially higher than City analysts were expecting when Axa made it is initial approach nearly two months ago, after the Sun Life share price dipped below £3. The price, which values SLP at £5.3bn, was well above the £4.60 a share Axa had been hoping to get away with last week.
Lord Douro, chairman, hailed yesterday's agreement as a vindication of the tough negotiating stance taken by the independent board members. "When one enters a negotiation of this nature neither side gets exactly what it wants. But we felt that the final outcome was such that it would have been incorrect not to recommend to shareholders."
Axa is hoping that doing away with the separate UK quote will enable the group to push ahead with plans for greater pan-European integration along product lines. The move follows the recent decision of Zurich Financial to give up its UK main listing, and reflects the generally poor rating UK investors give to insurance stocks.
Among areas where Axa is keen to develop a pan-European emphasis are fund management and IT, where plans are well advanced to develop a pan-European internet portal.
Henri de Castries, who takes over from Claude BÃ©bÃ©ar as chairman and chief executive of the Axa group at the annual meeting today, said: "We consider that the full integration of SLPH's operations within Axa's European insurance and asset management business ... will result in enhanced flexibility in managing these operations."
Sun Life shares rose 33.25p to 489.5p. Axa shares ended the day up 4 euros at 166 euros.
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