UK speciality insurer Beazley would recommend a sweetened £8 billion ($10.97 billion) takeover by Zurich Insurance once the Swiss firm makes a firm offer, it said on Wednesday after rejecting previous multiple bids.
Under the improved proposal, Europe's second-largest insurer, Zurich Insurance, would pay 1,310p per share in cash plus permitted dividends of up to 25p per share, valuing Beazley at up to 1,335p per share.
Beazley rejected a 1,280p per share offer from Zurich in January having also rejected a 1,315p offer last June.
Beazley's board said it was minded to recommend the offer should Zurich make a formal offer by February 16 under UK takeover rules.
Shares in Beazley jumped as much as nine per cent to a record high of 1,265p.
"After announcement it would seem risks should be low – both from any potential competing offer and indeed in terms of threat to closing," Mark Kelly, CEO of advisory firm MKI Global, said.
Buying Beazley would give Zurich a stronger foothold in speciality insurance, covering areas such as cyber, marine, aviation and space, and fine art, while also expanding in Britain at a time when its exposure to the US and the weak dollar have weighed on its performance and shares.
"Zurich looks forward to commencing its confirmatory due diligence on Beazley and working with Beazley towards a binding offer announcement," it said in a joint statement.
The takeover would also mark the latest foreign bid for a London-listed company, with relatively lower UK valuations continuing to attract overseas buyers.
The Swiss insurer had disclosed a 1.47 per cent stake in Beazley on Monday.
(Reporting by Raechel Thankam Job in Bengaluru and Anousha Sakoui in London; Editing by Nivedita Bhattacharjee, Rashmi Aich and Elaine Hardcastle)
