One of Britain’s oldest companies is set fall into foreign hands after a £7billion takeover bid for RSA Insurance Group.

The company, which dates back to 1706 and owns brands including More Than and Motability, has received a 685p-a-share joint approach from Canadian insurer Intact and Denmark’s Tryg.

A deal would trigger a windfall for RSA chief executive Stephen Hester, the former boss of Royal Bank of Scotland credited with bringing the bank back from the brink of collapse after the financial crisis.

RSA boss Simon Hester, (pictured) who had overseen a 4.6 per cent share price rise before yesterday’s climb, owns 833,664 shares outright in the company worth £5.7m under the deal

RSA boss Simon Hester, (pictured) who had overseen a 4.6 per cent share price rise before yesterday’s climb, owns 833,664 shares outright in the company worth £5.7m under the deal

RSA boss Simon Hester, (pictured) who had overseen a 4.6 per cent share price rise before yesterday’s climb, owns 833,664 shares outright in the company worth £5.7m under the deal

Hester, who raked in a total pay packet of £4.1million at RSA last year, could scoop up to £15.8m from shares he owns outright and others he could get through bonus schemes.

Since joining RSA in 2014, he has been paid a total of £22.2million.

Rumours of the deal sent shares up 45.8 per cent to 670p yesterday afternoon.

After the stock market closed, the RSA board confirmed it was in talks with Intact and Tryg and said it was ‘minded to recommend the proposal’ to shareholders.

RSA was founded by Charles Povey in 1706 as Sun Insurance in the aftermath of the Great Fire of London in 1666. 

Witnessing the destruction caused by the blaze, Povey became convinced that insurance was essential, and in the following decades his firm insured the homes of explorer Captain James Cook and scientist Charles Darwin.

Following mergers during the late 20th century, the company expanded to become Royal and Sun Alliance.

When it listed on the stock market in 1983, it was worth just £451million, but is now a member of the FTSE 100 index.

It renamed itself RSA in 2008, and now employs around 14,000 people and has more than 9m customers in 100 countries.

It underwrites home and pet insurance offered by the likes of John Lewis, Tesco and Argos.

The deal will mean a major payday for Hester, 59. Prior to the climb yesterday the shares had only risen 4.6 per cent under his six-year tenure. He owns 833,663 outright, worth £5.7million under the deal.

He has future entitlements to up to 1.5m more shares, depending on meeting certain performance conditions, worth another £10.1million. Whether he can sell these shares in the deal will be decided ‘much further down the track’, a spokesman said.

Intact and Tryg have until December 3 to decide whether they will make a formal offer. Tryg plans to pay £4.2billion of the purchase price, and keep RSA’s Sweden and Norway operations. Intact will cough up £3billion to take the Canada and UK businesses, and both would co-own RSA’s Denmark operations.

The bid is the latest in a string of foreign takeovers announced since the pandemic hit, as the value of UK stocks slid and overseas buyers look for bargains.

Security company G4S is attempting to fight off two bids, one from Canada’s Garda World and another from America’s Allied Universal.

US private equity firm Lone Star is trying to buy retirement housebuilder McCarthy and Stone, and William Hill has agreed to a £2.9billion buyout from US casino giant Caesars.

The AA, LV and Talktalk have also been targeted.

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This post first appeared on Dailymail.co.uk

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