Takeover fever boosts Irish Life shares
As a result, over two million shares changed hands in Irish Life, which many analysts think could be the focus of fresh takeover speculation following the move on the Pru by Aviva.
At one point, shares in the Irish group, which is joint leader in the insurance market with Bank of Ireland, were up by over 5% as the bid implications in Britain were taken on board in the Irish market.
The shares changed hands at €19.05 at one stage before slipping back to €18.80 in late trading, leaving the shares up 3.3% on the day.
Already, several big players are active in Ireland, including Royal Bank of Scotland, owners of Ulster Bank and First Active.
Danske Bank recently bought National Irish Bank and consolidation has left the Irish market pretty sewn up with few independent players left apart from Bank of Ireland, AIB and Irish Life & Permanent (IL&P).
“In the midst of this merger activity, IL&P’s size could put it on the acquisition radar given investors will be trawling the sector for takeover targets,” Goodbody analyst Eamonn Hughes said.
Analysts at NCB stockbrokers said Aviva’s bid was likely to boost shares in the insurance and banking group which have risen 36% over the past 12 months.
“Overall, the move could result in further consolidation in the sector. In terms of Irish Life & Permanent, today’s announcement should help underpin the shares,” said NCB.
How long the fever will last was difficult to say, said Mr Hughes. Speculation about the Irish financial sector has been a fact of life for quite some time. Both AIB and Bank of Ireland have been mentioned as takeover plays on several occasions, and Irish Life as well, said Mr Hughes.
For that reason, he said it was very difficult to put a rating on the present spate of share buying in IL&P.
In practical terms, the Aviva’s bid for the Pru put a premium of 10% on the share price and Mr Hughes said it was reasonable to expect that any bid for IL&P would have to be well above the value of the stock at the time of the offer.
If there is to be a move on an Irish company, then IL&P, at over €5bn, looks like the obvious target for an outside company looking to increase its presence in this market, he said.
But the company has been sitting out there for quite some time with an excellent track record, and so far, no move has been made, which could suggest a lack of interest in the business.
Its value has also shot up in the past 12 months and that in itself could make it a bit too expensive to buy.
However, insurance companies are awash with cash and in the current climate anything is possible, analysts say.
