Aviva PLC (LSE:AV.) is reportedly in talks to take over the consumer operations of rival RSA, despite Aviva being a takeover target in its own right.
Rationale for the RSA takeover appears to be to strengthen Aviva’s position in the UK non-life insurance market.
According to UBS analysts, this could be a potentially attractive combination, depending on the price.
USB said Aviva has the requisite cash and capital to make a bid somewhere in the £500 million to £700 million bracket.
As for a potential takeover of Aviva itself (Allianz, Intact and Tryg are being cited as possible buyers), UBS puts a 525p to 680p price tag on the deal, conforming to a speculative 600p takeover price mentioned in the press.
RSA is owned by Intact and its consumer business includes mostly home and pet insurance which could “diversify well with Aviva's life insurance business in the UK and Ireland”.
“A potential acquisition would also remain in line with Aviva's M&A strategy of ‘bolt-on M&A’ that adds to Aviva's strategic portfolio in capital-light areas,” said UBS.