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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Hastings Group Holdings plc    HSTG   GB00BYRJH519

HASTINGS GROUP HOLDINGS PLC

(HSTG)
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Sampo, RMI scoop up UK insurer Hastings in $2.2 billion cash deal

08/05/2020 | 09:00am EST
FILE PHOTO: A traffic jam is seen as cars head towards the approach tunnel of Heathrow Airport, west London

British motor insurer Hastings has agreed to be bought by Finland's Sampo and South Africa's Rand Merchant Investment (RMI) in a cash deal valuing it at 1.66 billion pounds ($2.2 billion), the insurers said on Wednesday.

The recommended offer gives 250 pence a share to Hastings' investors plus an interim dividend of 4.5p a share, a higher premium than expected after the companies said last week they were in talks.

Hastings shares, which had already soared 27% since the talks were disclosed, were up another 18% at 253p by 1242 GMT, topping the FTSE 250 midcap gainers and scaling a near two-year high.

RMI dipped 1%, while Sampo stock was down 4.1% due to the 47.1% premium paid over Hastings' July 28 closing share price, which Reuters Breakingviews said looked chunky given few cost savings on offer.

Sampo has been looking to expand into non-life insurance and beyond Nordic markets. It trimmed its stake in regional bank Nordea last year, freeing up 1.2 billion euros ($1.4 billion), which will help finance the Hastings investment.

With nearly 3 million live customer policies and an 8.1% share of the highly-competitive UK motor insurance market, Hastings aims to be one of the country's top motor insurers alongside the likes of Direct Line and Admiral, Hastings boss Toby van der Meer told Reuters.

Sampo CEO Torbjorn Magnusson added that there were also opportunities for Hastings to expand beyond motor insurance.

"The digital distribution part of the UK market is still growing and Hastings has not yet to any significant degree grown in home insurance," he said.

Analysts at KBW said the appeal of Hastings lay in its knowledge of pricing systems for motor insurance policies.

"(The) driving force behind the acquisition is the potential upside coming from the technological know-how the UK insurer can bring to the table," they said.

Once the deal goes through, Sampo will hold 70% of Hastings, while Main Street, an entity owned by RMI and its unit OUTsurance, will hold a 30% stake, a marginal increase on RMI's 29.7% stake in Hastings it has owned since 2017.

Van der Meer added that Hastings will be run as a privately-held independent company, separate from Sampo and RMI.

When questioned about any potential changes to top management, he said: "I don't think so."

Hastings also reported a 31% jump in first-half adjusted operating profit to 78.3 million pounds, driven by strong policy growth and a fall in motor claims as Britons drove less due to coronavirus restrictions.

That chimes with results from Direct Line earlier this week, when the company hiked its interim payout and set a special dividend.

J.P. Morgan Cazenove is acting as financial adviser for Sampo and RMI, while Barclays, Fenchurch and Numis advised Hastings.

Graphic: Hastings vs peers -

By Anne Kauranen and Muvija M


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ADMIRAL GROUP PLC -0.95% 2923 Delayed Quote.0.59%
BARCLAYS PLC -2.66% 148.8 Delayed Quote.1.45%
DIRECT LINE INSURANCE GROUP PLC -0.60% 329.5 Delayed Quote.3.29%
HASTINGS GROUP HOLDINGS PLC 0.00%End-of-day quote.39.29%
NORDEA BANK ABP -0.73% 70.76 Delayed Quote.5.27%
RAND MERCHANT INVESTMENT HOLDINGS LIMITED 0.09% 32.35 End-of-day quote.0.94%
SAMPO CORPORATION -0.39% 25.7 End-of-day quote.-1.34%
SAMPO OYJ -0.28% 35 Delayed Quote.1.24%
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Financials
Sales 2019 741 M 1 007 M 1 007 M
Net income 2019 69,7 M 94,7 M 94,7 M
Net Debt 2019 238 M 324 M 324 M
P/E ratio 2019 16,9x
Yield 2019 5,58%
Capitalization 1 651 M 2 195 M 2 244 M
EV / Sales 2018 1,94x
EV / Sales 2019 1,92x
Nbr of Employees 3 372
Free-Float -
Chart HASTINGS GROUP HOLDINGS PLC
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Hastings Group Holdings plc Technical Analysis Chart | HSTG | GB00BYRJH519 | MarketScreener
Income Statement Evolution
Managers and Directors
NameTitle
Tobias Adriaan van der Meer Chief Executive Officer & Director
Thomas Colraine Non-Executive Chairman
John A. Worth Chief Financial Officer & Director
Pierre P. J. I. M. G. LefŤvre Independent Non-Executive Director
Teresa Robson-Capps Senior Independent Director