What’s control worth in the UK? A current example

BVWire–UKIssue #17-2
August 18, 2020

discounts & premiums
control premium, factset mergerstat, mergers and acquisitions (M&A), merger price

Sources such as BVR/FactSet’s Control Premium Study (CPS) often support price premia above 25% as the assumed benefit of a controlling interest. We’ve seen an interesting current example of this principle the last two weeks in the largest listed company transaction this year: Finnish insurance group Sampo Oyj’s potential cash bid for London-based general insurer Hastings Group Holdings Plc. Sampo and Hastings share the same largest shareholder, Rand Merchant Investment Holdings Ltd.

Sampo Oyj has approached the London-listed insurer about a possible cash offer, according to a statement Wednesday confirming an earlier Bloomberg News report. Hastings is in talks with the consortium and has formed an independent board committee to consider any deal, it said in the statement.

Bloomberg News reported the bid two weeks ago, and shares of Hastings rose as much as 20% that day. While this increase was a one-day record for Hastings, it reflected a lower control premium from the market than usual, which is typically the case for insurers with their perceived performance and risk characteristics.

Over the next few days, the increase has averaged between 10% and 15%, putting Hastings’ control premium at about £200 million.

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