The two firms have offered to acquire all the shares of Hastings that are not currently owned or controlled by Sampo and RMI in the UK insurer for 250p per share
Nordic insurance group Sampo and Rand Merchant Investment Group (RMI Group) have reached a deal worth around £1.66bn (€1.84bn) to take 100% ownership of UK-based insurance company Hastings Group.
The two firms have offered to acquire all the shares that are not currently owned or controlled by Sampo and RMI in the UK insurer for 250p per share.
Hastings, which was established in 2016, is a motor insurer, which has been recently diversifying into other non-life insurance products such as home insurance and others. According to Sampo, motor and home insurance have large markets in the UK, which can be tapped into through the transaction.
Sampo and RMI have agreed to create a jointly owned company for the purposes of acquiring the UK insurer. After closing the deal, Sampo and RMI will have stakes of 70% and 30% in the jointly owned company, respectively.
RMI, which is a South African financial services investment holding firm already holds a 29.7% stake in Hastings, which it had acquired in 2017 for 248p per share.
Sampo, which is based in Finland, said that the size of its investment in the UK insurance company will be €1.29bn valued at the offer price.
The Finnish insurance group will look to fund its portion of the acquisition with nearly €1bn of newly issued hybrid Tier 2 capital with the remaining amount coming from available cash resources.
Samp is acquiring a stake in Hastings to further expand into the non-life business
Sampo is pursuing the deal to further grow into the non-life insurance segment in which it claims to have vast experience and also expertise. The company said that it has been looking to expand geographically beyond its current presence and believes that the UK being one of the largest retail property and casualty (P&C) markets in Europe, provides an attractive scale opportunity.
The Finnish insurance group stated: “The acquisition of Hastings provides an attractively positioned platform in one of the most digitally advanced markets globally. The UK is characterized by its high levels of digital distribution and Hastings is one of the leading distributors of motor insurance policies in this market.
“Sampo believes that, under its ownership together with that of RMI, Hastings will be able to further develop its agile and digital business model to create long-term value.”
Sampo and RMI plan to operate Hastings as a standalone company but on an unlisted basis to enable it to gain from a more long-term approach towards decision making.