Esure shares leap on takeover swoop from Bain Capital

● Insurer’s board ‘minded to recommend’ £1.2 billion offer from private equity firm

Shares in Esure raced ahead yesterday after the motor and home insurer revealed that it was in advanced talks over a possible £1.2 billion takeover by private equity firm Bain Capital.

The group, which employs hundreds of staff at a major sales and customer support centre in Glasgow, said in a stock market announcement that Bain was offering 280p per share, a 37 per cent premium on Friday’s closing share price.

The board of Esure has indicated to its private equity suitor that it would be “minded to recommend” a firm offer.

In a brief statement, the insurer said: “The board of Esure notes the recent movement in its share price and confirms that, having received an unsolicited proposal from Bain Capital Private Equity and its affiliates, it is in the advanced stages of discussing a possible offer for the entire issued and to-be-issued share capital of the company by Bain.

“The board of Esure has indicated to Bain Capital that it would be minded to recommend a firm offer for Esure if made by Bain Capital at the price set out in the proposal.”

It added: “There is no certainty that an offer will be made for the company.”

Under UK takeover rules, Bain has until early September to announce a firm intention to make an offer or walk away.

Shares in Esure last night closed up 31 per cent at 267.2p.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “The group’s underwriting performance has been unexceptional and, while there have been improvements recently, it’s still well off best in class.

“That’s not entirely surprising, since profitable insurance contracts haven’t been a major feature of the Esure business model for some time.

“Well over 60 per cent of group profit is from selling third-party ancillary products to Esure customers.”

The insurance group was founded in 2000 by businessman Sir Peter Wood, who had previously launched the Direct Line insurance operation in the mid-1980s. He remains the chairman of Esure Group.

In January, the firm parted company with chief executive Stuart Vann, triggering a search for a new boss.

The group said it would end his tenure with immediate effect and recruit a chief executive fit for an “increasingly digital and data-driven world”.

The move saw chief finance officer Darren Ogden become interim chief executive until a permanent replacement is found.

Esure provides insurance products to more than two million drivers, home-owners, pet owners and holidaymakers across the UK.

Private equity firms are increasingly getting involved in insurance takeover deals in Europe.

Firms including Apollo Global Management LLC have been snapping up similar insurers in the US. Cinven is in talks to acquire a retirement products unit of France’s Axa.