FBD takeover speculation lifts shares

TAKEOVER speculation drove the shares of FBD nearly 20% up by lunchtime yesterday on rumours Dutch insurance giant Eureko was lining up a bid for the Irish group, founded by farmers to meet their own farm insurance needs.

By late afternoon shares in the group had fallen back from the earlier high, but were still up by over 15% in late trading, €34 having closed Friday at €29.20.

At close FBD gained €4.80, or 16%, to €34 in Dublin trading, the biggest increase since August 2003.

The supposed offer from unlisted Eureko is believed to be priced at around €36.1 per share, according to unconfirmed reports.

Eureko owns Friends First in Ireland and at a price of €36.1 values the group at €1.2 billion.

British brokers Keefe, Bruyette & Woods yesterday cut its recommendation on the stock to “under-perform” from “market perform” with an unchanged price target of €31 on the shares.

Explaining its stance, it said FBD had described the terms of the approach as “unclear“, biased in favour of certain stakeholders and “highly conditional”.

And with FBD management refusing to comment further on the offer “we question whether Eureko intends to offer more favourable terms to FBD’s two largest shareholders“.

Both Farmer Business Developments and the FBD Trust between them hold around 36% of FBD with the latter holding 25.68% of the group’s equity.

In the current circumstances, and allowing for the positive price movement in the shares, “we would advise taking profits“, KBW said in a note to investors.

FBD has not said what the initial indicative offer was from the Dutch insurer.

It also stressed that no offer had been received and there was no certainty of an offer emerging as a result of the initial takeover approach from Eureko.

FBD last month announced a sharp fall in profits from €296m to €162m.

it followed a direct hit to its investment portfolio as a result of falling stockmarkets of € 69.2m over the year as well as a gain from the sale of some property assets in Spain in 2006.

Apart from its insurance arm, the group owns the La Cala and Sunset Beach resorts in Spain and the Tower Hotel Group in Ireland and also owns Bloxham Stockbrokers.

Set up in the 1960s by Farm Business Developments, FBD consisted of about 4,500 investors, the majority of them with a background or a direct involvement in farming.