Norwich Union's 86,188 shareholders in Ireland are being offered 48 shares in the proposed CGNU merged company for every 100 Norwich Union shares they hold.

There is no cash alternative to the all-paper offer, and this has led some in the market to suggest that a counter-bid for either CGU or Norwich Union from a predator offering cash is a distinct possibility.

Pan-European insurers such as the German group Allianz and the Dutch groups, Aegon and Eureka, have been most commonly mentioned as interested in buying into the British and insurance markets.

Norwich Union was floated on the stock markets in July 1998 in a flotation that resulted in a headlong rush by Irish investors to buy the stock. This rush led to more than £500 million being borrowed by Norwich policyholders who wanted to buy additional shares at a discounted price over and above their free allocation.

In the flotation, Norwich Union's 150,000 members in Ireland were allocated a minimum of 300 shares, worth about £1,000 at the time. But those who got free shares were also given the opportunity to buy additional shares at a 25p discount to the flotation price of 290p sterling a share.

Since then, Norwich Union shares have performed reasonably strongly, although there was never the massive windfall gains that occurred with some other flotations. There was steady selling after the flotation by Irish shareholders, with the result that the original 150,000 had been whittled down to just more than 86,000.

From that flotation price of 290p sterling, the shares hit a high of 490p sterling and were trading at 435 1/2p sterling before yesterday's merger announcement. From there, the shares traded up to 460p sterling before the weakness of the market after Wall Street's slump on Friday brought them back to a close of 396 1/2 sterling, down 39 1/4p on the day.