Analyst misunderstood CFO George Culmer’s comments

RSA shares lost 2.5p to 123.5p despite the company denying it was looking at acquisitions of up to £600m and might issue new shares to fund any deal, the Guardian reports.

In a more detailed blog posting the Guardian said there was now a dispute about whether or not RSA said anything new at an investor day held by broker Keefe Bruyette & Woods.

KBW said possible acquisitions could include UK marine and specialist commercial line, or purchases in Latin America or Canada, and as much as £600m could be raised to fund the buyouts

Lots of opportunties

KBW said: "[RSA] mentioned that the above-average number of acquisition opportunities was because of restructuring or financially stretched owners, particularly banks and private/family companies.

"We believe that any potential plans by management to make large acquisitions could bring more risks than benefits. The stock does not look particularly expensive or cheap, in our view."

RSA said that George Culmer, its chief financial officer, had addressed the KBW conference but had said nothing new and used past examples where funds had been raised.

Nothing new

Credit Suisse analyst Paul Lloyd said: "Having spoken to the company this morning, RSA maintains that it said nothing new over and above comments already made on its strategy over time and merely gave examples of the types of deals it had done in the past including bolt-ons and Codan when questioned about the sorts of deals it could potentially look at. The CFO commented on the need to raise equity, should it make a large acquisition, but only in the context of maintaining its S&P rating, just like it did when it bought in the minorities of Codan."

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