Delta Lloyd rejects NN Group's takeover proposal
October 07 2016 - 01:30AM
Delta Lloyd N.V. (hereafter
"Delta Lloyd" or the "Company") notes the announcement made
by NN Group N.V. ("NN Group") on 5 October 2016 and confirms
that it received an unsolicited and conditional proposal from NN
Group on 2 October 2016 regarding a possible cash offer for
Delta Lloyd at a price of €5.30 per ordinary share.
The Executive Board and Supervisory Board (together, the "Boards")
of Delta Lloyd have carefully reviewed and considered NN Group's
proposal.
The Boards believe that Delta Lloyd is a strong business with a
compelling strategy and a clear path to value creation on which it
is showing good progress.
Consistent with their fiduciary responsibilities, the Boards of
Delta Lloyd are not opposed to transactions that would create
compelling value for shareholders and deliver benefits to other
stakeholders.
The Boards are of the opinion that the financial terms and
conditions set out in NN Group's proposal do not form an acceptable
basis for such a transaction. Accordingly they reject NN Group's
proposal.
Hans van der Noordaa, chairman of Delta
Lloyd's Executive Board, 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."
In coming to this decision the Boards took into account the
following factors, amongst others:
-
The proposal substantially
undervalues Delta Lloyd, its prospects and its strategic
opportunities
The terms of the proposal
represent only 0.64x 30 June 2016 book value and an implied
consensus 2017E dividend yield of 5.6%[1]. The
premium of 29% to the closing price of 4 October 2016 is below
market norms for cash transactions of this type and for companies
at our stage of recovery. The premium is only 11% when compared to
Delta Lloyd's undisturbed 6 month high share price of €4.79;
-
The timing is opportunistic in
light of Delta Lloyd's progress on its strategy
Following a challenging period, Delta Lloyd has made strong
progress on stabilising its balance sheet and implementing its
strategy including in recent days the announced merger of Delta
Lloyd's life businesses in The Netherlands and Belgium. This
proposal is opportunistic in its timing, seeking to take control of
the Company before shareholders, customers and employees have fully
benefitted from the realisation of management's plans;
-
The proposal fails to reflect
an appropriate share of benefits of Dutch
consolidation
The benefits of combining Dutch insurers are significant. These
benefits include cost synergies, avoided investment and project
spend, capital and financing synergies. The Boards believe that
Delta Lloyd shareholders are in a position to benefit from the
value of these synergies through a number of possible combinations
now or in the future. NN Group's proposal does not deliver an
adequate share of this value for Delta Lloyd's
shareholders.
The Boards believe that Delta Lloyd can create
substantial value for shareholders from implementing its current
strategy:
-
Delta Lloyd has made
substantial
progress during 2016 on its capital plan
The Company has implemented management actions to improve the
strength and stability of its balance sheet, including the Van
Lanschot equity offering, de-risking and ALM actions which
delivered 173% Solvency II at 30 June 2016. Delta Lloyd continues
to improve the level and resilience of its capital through further
management actions, including most recently the Belgian merger
announced on 5 October 2016, which is expected to add an
incremental 5 percentage points to its Solvency II ratio, and the
Partial Internal Model which is on track for implementation from 1
January 2018;
-
Delta Lloyd is executing
actions to improve operational performance and capital
generation Delta Lloyd has a clear plan to improve its life new
business margins and P&C combined ratio, to improve strategic
asset allocation, to reduce financing costs following deleveraging
and to implement its announced cost saving targets of c.€60m by
2018. These measures together will mitigate the adverse impact of
current low interest rates on capital generation. Delta Lloyd
remains committed to its capital generation target of €200-250m per
annum over time and its target dividend of €130m for 2016;
and
-
Upside from realising the value
of Delta Lloyd's customer franchise for stakeholders
Delta Lloyd serves 4.2 million customers across the Netherlands and
Belgium through our strong multichannel platform, with leading
positions in attractive capital light segments of the life market
such as defined contribution pensions and protection. Delta Lloyd
is a leader in IFA and customer satisfaction and has a consistent
track record of effective cost management. In the context of the
developing Dutch long term savings market, this franchise is
particularly well positioned for the future to drive value upside
for shareholders and other stakeholders.
A copy of this announcement will be on our website
www.deltalloyd.com.
This is a public announcement by Delta Lloyd N.V.
pursuant to section 17 paragraph 1 of the European Market Abuse
Regulation (596/2014). This public announcement does not constitute
an offer, or any solicitation of any offer, to buy or subscribe for
any securities in Delta Lloyd N.V.
[1] IBES
Consensus 2017 dividend estimate of €0.295 per share as of 4
October 2016
full press release
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Delta Lloyd via Globenewswire
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