Dutch Insurer Aegon Eyes Acquisitions Such as Smaller Competitor ASR

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Aegon NV, the Dutch insurer that generates most of its business from the U.S., is scouting for acquisitions and has looked at companies including smaller rival ASR Nederland NV amid consolidation in the domestic market, according to people familiar with the matter.

As part of its search for potential targets, The Hague-based Aegon recently made an informal approach to ASR but the preliminary overture was rebuffed, the people said, asking not to be identified as the information is private. It isn’t clear whether Aegon, which is working with advisers on its merger strategy, is still interested in ASR, the people said.

Any potential takeover of ASR would rank among the largest insurance deals in Europe in the last five years, joining the ranks of Aviva Plc’s acquisition of Friends Life Group Ltd. in 2014, according to data compiled by Bloomberg.

ASR, which raised 1.02 billion euros ($1.2 billion) in an initial public offering last year, has a market value of about 5 billion euros. Its shares have risen about 53 percent this year, while Aegon is worth about 10.5 billion euros after a 4.6 percent drop, which may hurt the chances of a deal, the people said.

A spokesman for Aegon said the company doesn’t comment on “rumors.” A spokeswoman for ASR declined to comment on “market rumors,” saying only that the company believes it’s strong enough for a standalone position in the Dutch insurance market.

Aegon has been under pressure to break up and list its European and U.S. units separately, Olivetree Financial Ltd. said in a report following the Bloomberg story. Industry observers have suggested Aegon might look to bolster its European operations through an acquisition of ASR or Vivat NV as a precursor to a de-merger, the report said.

“ASR stock is generally perceived by the market as cheap, it should be running a more aggressive business model now that the government has fully exited its shareholding — and its capital surplus position is likely of interest to Aegon’s Dutch business,” Olivetree said.

ASR’s stock rose 2.5 percent to 34.86 euros at close in Amsterdam after gaining as much as 8.1 percent. Aegon shares fell 0.5 percent to 4.98 euros. ASR trades at about 8 times trailing earnings, while Aegon is at 6.4.

The domestic insurance market has already seen consolidation as local players look to boost scale and cut costs amid pressure on investment returns. NN Group NV agreed to acquire Delta Lloyd NV for about 2.5 billion euros last year.