UK insurer RSA says receives 5.6bn pounds bid from Zurich

British insurer Royal & Sun Alliance said Tuesday that it has received a 5.6-billion pounds takeover approach from Swiss rival Zurich Insurance, sending its share price soaring.
RSA announced in a statement that Zurich has made an informal bid of 550 pence per share, adding that the pair are now in talks.
"The board has indicated to Zurich that it would be willing to recommend an offer at the level of the possible offer to RSA shareholders subject to the satisfactory resolution of the other terms of the offer," the British firm said in a statement.
"Accordingly, the board is in discussions with Zurich in relation to these terms."

The announcement sent RSA's share price surging to the top of the risers board on the London stock market.
RSA shares jumped 4.65 per cent to 518 pence in early afternoon deals on the British capital's FTSE 100 index of leading companies, which was 2.83 per cent higher at 6,065.42 points.

"We expect RSA's shares to respond favourably... With a deal now seeming inevitable, in our view," said Shore Capital analyst Eamonn Flanagan.
"We retain our buy recommendation on RSA and await the possibility of a counter-bid from another Continental European insurer."
Under the terms of the proposal, RSA shareholders reserve the right to receive the recently declared interim dividend of 3.5 pence per share.

The potential offer is conditional on the approval of the RSA board, as well as due diligence.
Zurich had revealed in late July that it was evaluating a potential bid for RSA but gave no indication of price. RSA said at the time that it had not held talks or received a proposal.