RSA’s Bid To Acquire Aviva Fails

So another big ticket acquisition attempt bites the dust. Aviva formally announced the rejection of $7.8 billion bid by RSA, its strongest rival, to buy Aviva’s general insurance business in UK, Ireland and Canada. Mergers and Acquisitions have been always very amusing; always make interesting news and even minor development are covered extensively by visual and print media. Infact Aviva also, couple of years back, tried to acquire Prudential PLC but had failed. But it’s the fact of life that if a company wants to acquire a strong footing in a particular segment of business than acquisitions are the most expensive, tiring but easiest route.

RSA made this offer on july 28th to Aviva. RSA was quite confident of this bid since it was offering an amount which was far more than the revenue generated by the general insurance businesses of Aviva in those countries and also exceeded the net assets of those businesses. RSA also claimed that this deal was a win win situation for the share holders of both the companies and that it could help the combined entity save a whopping 300 million dollars in operating costs annually.

Aviva’s argument in rejecting this bid offer was that during previous year general insurance contributed to nearly half its total earning so it is prudent in their part, keeping in mind interests of their share holders, not to accept this bid since they consider it to be too low. Though RSA has still not give up hope and who knows it may better the offer and lure Aviva to finally give in.