Cash-rich Zurich Insurance is weighing a bid for British rival RSA Insurance Group which could top $8 billion. As David Pollard reports, it was one a number of new tie-ups moving European markets.
Deals lift Europe's markets out of the doldrums for a change. Mergers and acquisitions prompting a welcome turnaround in the mood from worries over China. Cash-rich Zurich Insurance first. It confirmed it's weighing up whether to make an offer for British rival RSA. Zurich is said to have around three billion dollars of cash in its coffers - and could take on debt of up to five billion. Enough, possibly, for another major tie-up after Swiss giant, ACE's 28 billion dollar acquisition of Chubb. The sector on a hunt for new revenues to boost old business models, says Seven Investment Management's Justin Urquhart Stewart. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, SEVEN INVESTMENT MANAGEMENT, JUSTIN URQUHART STEWART, SAYING: ''If they cannot come up with new facilities and services which consumers want to buy, therefore go and buy somebody's else's book and I'll get some economies of scale with merging it with my book. So Zurich with someone like Royal Sun Alliance or someone like that could well be a possibility to do so.'' And Honeywell is to buy the utility consumption meter business of Britain's Melrose Industries. The US maker of aircraft parts and climate control systems is paying 3.3 billion pounds cash. Melrose is a turnaround specialist that follows a buy-improve-sell strategy - it says it'll return two billion pounds to shareholders after the sale. While the prospect of further M&A ahead will good news for markets, too, says Stewart. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, SEVEN INVESTMENT MANAGEMENT, JUSTIN URQUHART STEWART, SAYING: ''You're going to see more of this going on at the moment. If they see the economy growing slower, but still growing, therefore companies, will look at other ways - or their advisors - will look at other ways of trying to grow the business so mergers are one way of achieving that.'' Shares in RSA were up over 12 per cent on the news - Melrose 16 per cent.