Dutch insurer Delta Lloyd rejects $2.7-bn takeover bid from NN Group

Dutch insurer Delta Lloyd NV today rejected a takeover bid by local rival NN Group NV, saying that the €2.4-billion ($2.7 billion)  offer "substantially undervalues" the company.

NN Group, the Netherlands' largest insurer by market capitalization, had last month offered to pay €5.30 per share, a 29-per cent premium to Delta Lloyd's closing €4.12 price on 4 October, and 53-per cent higher than its three-month average. (See: Largest Dutch insurer NN Group to buy smaller rival Delta Lloyd for $2.7 bn)

Hans van der Noordaa, chairman of Delta Lloyd, said, "We have considered NN Group's proposal carefully and have decided to reject it. We have a clear strategy and we are delivering on our priorities of capital, performance and customer. We have made good progress during 2016. Our capital position is now solid with opportunity to improve further capital generation and dividends. In light of this, we cannot accept this proposal."

Delta Lloyd also said that premium of 29 per cent is below market norms for cash transactions of this type and the premium is only 11 per cent when compared to its undisturbed 6 month high share price of €4.79.

Delta Lloyd, a former unit of UK insurer Aviva Plc, has been for some time been considered by analysts as a takeover target takeover.

The Amsterdam-based insurer's stock has dropped by around 70 per cent since the start of 2015 due to new stringent insurance rules.

Earlier this year, it raised €650 million through a rights issue despite opposition from some major shareholders.

A successful deal would have created a well-diversified leader in the Dutch pensions, life and non-life insurance and banking sectors, with a strong asset management platform, attractive international presence, and growth opportunities.

While announcing the takeover proposal, Lard Friese, CEO of NN Group, had said, ''We believe there is a clear and compelling logic to bring consolidation to the Dutch insurance market through a combination of the businesses of NN Group and Delta Lloyd in a way that benefits both companies and their stakeholders.''

''The combination will be a leading player in the Dutch insurance, banking and asset management markets, with a strong international presence, which will benefit from economies of scale and significant free cash flow generation potential, and offer an array of attractive products and services to customers,'' he had added.