Eureko in takeover approach for FBD

FBD HAS received a takeover approach from privately-owned Dutch financial giant Eureko, which is reported to be mulling a €1.2 billion bid.

In a statement issued last night, the board of the insurance company said it noted "weekend press speculation" and confirmed a preliminary approach from Eureko, which owns Friends First in the Republic.

"The preliminary approach is unclear, appears to differentiate among shareholders and is highly conditional," the statement continued.

The shareholders being treated differently are likely to be the Farmer Business Development group, which owns 25.68 per cent of the company, and the FBD Trust Co, which controls a further 8.98 per cent.

Together, the two groups would be able to block any takeover bid and it is possible Eureko may believe them to be more amenable to some sort of partnership arrangement.

FBD went on to say no offer had been received and that there could be no certainty that a formal offer would emerge. It is thought that no discussions on a deal have been held, although FBD has engaged Goodbody Corporate Finance and Goldman Sachs International as advisers.

For its part, Eureko limited itself to confirming it would be "potentially interested" in FBD.

The unusual step of issuing a regulatory statement on a Sunday came after the Sunday Independentreported that Eureko had lodged a €1.2 billion takeover approach with FBD.

The newspaper said Eureko made contact with FBD some weeks ago and is prepared to make a bid for the company at a premium to its current share price. The insurer closed at €29.20 on Friday, leaving it with a market capitalisation of €970 million.

Takeover speculation has surrounded FBD since the end of last year, when interest from a major European insurer was first reported. This has helped support the firm's share price at a time when other financial stocks on the Iseq have been in freefall.

FBD has risen in value by 14.5 per cent since the start of the year, while the financial com-ponent of the Iseq has declined in value by 10 per cent.

After the two farmers' groups, FBD's biggest shareholder is Allianz, with a 5.5 per cent position. Eureko does not have a declared holding in the company but it is possible that it controls a position through contracts for difference (CFDs), the derivative instruments that allow for undisclosed share purchases.

At a results presentation last month, FBD chief executive Philip Fitzsimons called for greater disclosure on stakebuilding through CFDs.

His call came as FBD posted a 45 per cent decline in pretax profit to €162.1 million for 2007 after suffering in weaker markets.