Admiral Group Plc has reached an agreement with ZPG Comparison Services Holdings UK Ltd. (RVU) to buy its Penguin Portals online comparison sites and its Preminen stake for a total consideration of £508 million. Admiral’s LSE-traded shares climbed 3.3% in early afternoon trading.
According to the proposed deal, RVU will snap up Admiral’s (ADM) online comparison portals Confused.com, Rastreator.com and LeLynx.fr, as well as the group’s technology operation, Admiral Technologies. In addition, RVU will also purchase the UK insurer’s 50% share in Preminen Price Comparison Holdings.
Meanwhile, global insurer MAPFRE also announced that it will sell its 25% holding in Rastreator and 50% holding in Preminen as part of the transaction. Admiral added that its US comparison business, compare.com, is not included in the deal and that it expected the transaction to slightly reduce its future earnings.
The UK insurance group said it plans to return a majority of the estimated £450 million in transaction proceeds to shareholders. However, a small portion of the proceeds will be retained to support investment in new business development over the coming years, the company added. The transaction is expected to close in the first half of 2021, pending regulatory and competition authority approvals.
“The combination of Penguin’s strengths, notably in insurance comparison across much of Europe, with RVU’s strengths beyond insurance and experience in growth through acquisition, provides a solid foundation for the combined businesses to grow and prosper,” commented Admiral CEO David Stevens. “Admiral will continue to focus on what Admiral has consistently done well, namely designing and underwriting good value mass market financial service products.”
“Comparison will continue to be Admiral’s most important distribution channel in Europe and we look forward to continuing to work closely with Confused.com, Rastreator and LeLynx as they continue to grow and strengthen the customer offering,” Stevens added. (See ADM stock analysis on TipRanks)
Coming now to recent analyst coverage of ADM, the stock has picked up 2 Hold ratings which add up to a Hold consensus. With shares up 31% on a year-to-date basis, the average price target stands at 2,443.50p and now implies downside potential of 19% over the coming 12 months.
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