Kiln, the Lloyd's of London insurer, has recommended a 442m offer from the Japanese group Tokio Marine & Nichido Fire Insurance (TMNF).
The all-cash bid, at 150p a share, represents a premium of more than 40 per cent to the Lloyd's insurer's closing share price on Monday, the day before Kiln announced it was in discussions with a third party.
The Japanese company, which is a subsidiary of Tokyo-listed Millea Holdings, said it had already received irrevocable undertakings from shareholders representing more than 20 per cent of Kiln's equity, including the US insurer WR Berkely. The board of Kiln said it had recommended the offer unanimously to shareholders.
"We have enjoyed a close and long-lasting business relationship with Kiln since its formation in 1962, and believe we share the same fundamental values and business philosophy," said Shuzo Sumi, president of TMNF. "This agreement represents an important milestone in our stated strategy to expand internationally and we believe Kiln, with its underwriting expertise, skilled employees and strong brand, represents the perfect partner."
Ed Creasy, chief executive of Kiln, said: "Kiln's strategy will be facilitated by becoming part of a major international group, which recognises the strength of our brand, respects our existing culture and which will provide exciting opportunities for Kiln's employees. TMNF, with its established national and international presence, its strong balance sheet and matching values will provide Kiln with excellent opportunities in all these respects."
Shares in the rival London-based insurers Chaucer and Novae Group rose as investors speculated there may be more consolidation in the UK insurance sector.
Analysts at Numis Securities said: "This deal highlights the strategic attraction of both Lloyd's and London for international companies looking to expand."Reuse content