GE Challenges Halifax Bid For Equitable
The battle for troubled U.K. mutual insurer Equitable Life heated up over the weekend with the mortgage lender Halifax tabling a £1 billion ($1.47 billion) bid for the sales forces, offices, administrative systems and fund management business; only to find that GE Capital had reentered the bidding with an announced £1.2 billion ($1.76 billion) bid.
GE Capital, the parent company of Employers Re, indicated that it would challenge any bid Halifax has made, and was prepared to support the long-term fund, which is obliged by court order to pay out at least £1.5 billion ($2.2 billion) in guaranteed annuity payments, and possibly much more.
The two bids came at the last moment, following the successive withdrawal of other would-be suitors, including the U.K.’s Prudential, Aegon, and Australian insurer AMP.
According to a report in the Financial Times GE plans to incorporate Equitable into GE Insurance Holdings, “its European consumer insurance operation,” formed in 1999. It would use the acquisition as a “launching pad for an aggressive move into continental Europe.”
An Equitable spokesman appeared to side with Halifax in noting that GE was proposing to support the fund by loaning it money, which would eventually have to be repaid. Halifax has not offered to take over the fund, but has said it would administer it, “at cost.”
GE’s plan calls for reopening the fund, which has been closed to new business, and operating it as part of GE’s other European holdings.
Equitable is scheduled to make a recommendation to its policy holders today, but a GE advisor told the FT that “They are going to have to explain any recommendation they give without having fully examined what we believe to be a stronger offer for policyholders.”
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