A sharp rise in the number of hostile take-over bids in 2003 is likely to encourage more companies to seek insurance cover against the cost of fighting off a hostile predator, said Hiscox.
Hiscox underwriter Anka Taylor, said that inquiries about take-over insurance had shot up in recent months, while actual sales had risen 5% last year.
It said specialised take-over insurance covered the costs involved in thwarting an unwanted approach, including fees from bankers, legal costs, and the price of printing defence documents for shareholders.
Taylor said: “On the back of high-profile companies like Six Continents becoming hostile bid targets last year, more companies are thinking about how they can protect themselves against predators.
“They may not be able to prevent falling prey to a hostile bidder but they can mitigate the typically enormous costs.”
Sixteen hostile bids were launched in the UK during 2003, compared with eight in 2002. The previous highest number of hostile bids in any one year in the UK was 25 in 1991.
The first eight weeks of 2004 have already seen a number of major hostile bids launched across the world stage including Comcast for Disney and Sanofi for Aventis.
According to Hiscox, the average cost to a smaller company of defending a hostile bid can be as much as 2.5% of the bid value, and has been as high as 10% in previous cases. Larger companies have historically spent up to 1% of the bid value.
