Intact gets pension-fund backing for RSA deal

$9.5B takeover would be biggest acquisition of a U.K.-listed firm this year

Canadian insurer Intact Financial Corp. struck a deal with three of the country’s largest pension funds for $3.2 billion in financing to back a takeover of RSA Insurance Group Plc.

Intact and Danish insurer Tryg A/S have joined forces to make a $9.5 billion (U.S.)-takeover proposal for RSA.

It would be the biggest acquisition of a U.K.-listed company this year.

Toronto-based Intact said Thursday it has received a commitment from Caisse de dépôt et placement du Québec for $1.5 billion (Canadian), while the Canada Pension Plan Investment Board would provide $1.2 billion and the Ontario Teachers’ Pension Plan $500 million.

The investment comes in the form of subscription receipts at $134.50 each and is conditional on a firm deal for RSA. That’s a slight discount to Intact’s closing share price of $135.90 on Wednesday.

Intact has been one of Canada’s standout financial stocks, rising about 53 per cent over the past five years. That makes it the sixth-best performer among 26 companies in the S&P/TSX Financials Index over that time period, according to data compiled by Bloomberg.

The pension funds will receive one share of Intact per receipt, as well as a commitment fee upon closing.

RSA is set to be broken up under the plan, with Intact keeping Canadian and U.K. and international operations. Tryg would take the Swedish and Norwegian operations. RSA’s Danish business would be jointly owned by the two firms.