Dutch Insurer Delta Lloyd Rejects NN Group’s Unsolicited €2.4B Cash Offer

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Dutch insurer Delta Lloyd NV rejected NN Group NV’s unsolicited 2.4 billion-euro ($2.7 billion) cash offer, saying the financial terms aren’t acceptable and don’t reflect the benefits of consolidation.

“NN’s offer substantially undervalues our company,” Delta Lloyd CEO Hans van der Noordaa said in a phone interview on Friday. “We will always take a good look at serious proposals.”

NN offered 5.30 euros a share on Wednesday for the Amsterdam-based insurer, 29 percent more than the previous closing price. Saskia Kranendonk, a spokeswoman for NN, declined to comment on the bid’s rejection. Delta Lloyd rose as much as 3.4 percent and was trading at 5.38 euros at 12:36 a.m. in Amsterdam trading. NN was almost unchanged at 28 euros.

Delta Lloyd has often been cited as a potential target for NN, the Dutch insurer and asset manager spun out of ING Groep NV in 2014. Delta Lloyd returned to profit in the first half after cutting costs and completed a 650 million-euro rights offer to improve the company’s capital levels and comply with stricter requirements for insurers introduced by the European Union in January.

‘Higher Offer’

“The transaction in clearly accretive for NN shareholders and we see the rejection of Delta Lloyd at this stage as part of the (negotiation) process with the aim to obtain an higher offer price,” Albert Ploegh, an analyst at ING Groep NV, wrote in a note to clients.

NN could offer from 5.80 euros to 6.10 euros if it is willing to accept a lower return on investment, but the majority of the synergy savings would go to Delta Lloyd shareholders if that happens, Ploegh wrote.

NN plans to finance a successful offer using existing resources and debt. The Hague-based company is also suspending an outstanding part of a 500 million-euro stock buyback.

Delta Lloyd shored up its capital buffers in a highly contested rights offer in April, which only went ahead after Fubon Financial Holding Co., one of its largest investors, unexpectedly changed positions from opposing the share sale to supporting it. Fubon, which holds almost 10 percent of the insurer, previously backed Highfields Capital Management LP, one of Delta Lloyd’s largest shareholders, in a court bid to block the vote.

“Delta Lloyd is a strong business with a compelling strategy and a clear path to value creation on which it is showing good progress,” the company said in a statement on Friday. The insurer isn’t opposed to transactions that would “create compelling value for shareholders and deliver benefits to other stakeholders.”