Jefferies downgrades RSA Insurance after takeover approach

Jefferies downgraded its rating on shares of RSA Insurance on Monday to ‘hold’ from ‘buy’ after the insurer confirmed last week that it was in talks to sell itself for £7.2bn to a consortium comprising Canada’s Intact Financial Corp and Denmark’s Tryg A/S.

It said that since news of the talks, the shares have risen by 44%, which is what has triggered the downgrade.

Jefferies noted that the bid is highly complex, involving multiple regulators on three continents and requiring a new joint venture arrangement to be set up in Denmark.

"Such a transaction could take longer to complete, suggesting that a greater discount for the time value is warranted," it said. "As such, though we raise our price target to 650p, we downgrade RSA to hold."

The target price was lifted from 600p.

At 1350 GMT, RSA shares were up 0.3% at 650.80p.