Investors are fickle, judging by how they deal with Aviva. After the failure of his attempt to OPA of 17 billion pounds on Prudential competitor, the first British insurance company seemed to run out of inspiration. Yet his friendly OPA, successful on Ameru for 1.6 billion pounds (2.3 billion euros), announced Thursday, does not seem to reassure the stock market and the Aviva shares immediately fell by 3.2 on the same day in London.
The operation however allows the company, which is under-represented in the United States, better foothold on the market and get a market share of 9 to 10. By purchasing Ameru, Aviva will increase its US assets under management: the British company now generates 90 of its turnover in Europe and has $ 6 billion of assets under management in the United States, against 24 billion for Ameru. In addition, the American company is specialized in the segment growing retirement insurance products related to indices and is expected to generate strong growth in an America where baby boomers approaching retirement age. "The combination of national distribution networks of Ameru and resources and the experience of Aviva will provide the platform to generate significant profitable growth in the United States," said Richard Harvey, Executive Director of Aviva.
Aviva will finance the acquisition with the issuance of 129 million new shares to 700 pence each, an increase of capital of 900 million pounds, which was fully subscribed as early as its launch Thursday. The balance will be funded by Aviva's cash and debt. The transaction is expected to save 45 million per year by merging Ameru with existing activities of Aviva across the Atlantic and should contribute to the profits of the group in 2007.
But investors believe the purchase price, 69 $ per share, i.e. a 10 bonus on the course of stock exchange on 6 July, too high, for a market share still insufficient. Richard Harvey j. otherwise: "Ameru buy us leads a coup at the level where we want to be in the United States and provides us with a platform of respectable size," he explained, be any idea of another acquisition in the United States and more of resumption of discussions with Prudential: "We have clearly expressed that this operation is canceled." They say that they are not interested. "We do not believe that they will change their minds, therefore, from our point of view, it is completely finished," insisted the Executive Director of Aviva.
At the same time, Aviva has published a point on its results for the first half of very optimistic. The scepticism seems therefore justified to some analysts as Tim Young, analyst at Collins Stewart, who noted that this type of redemption is typical of Aviva, which is used to find high-yield niche operations. Thus, resumption of RAC for 1.1 billion books was a success because it generated more synergies than expected and is already contributing to the results of the group.
Meanwhile, Merrill Lynch advised the title for the purchase: the shares fell 10 in the last 10 days, argue the broker, which is 1.9 billion market capitalization books, much more than what is paid for the purchase of Ameru...