As hostile bids increase, corporates seek protection
The sharp increase in the number of hostile bids in 2003 adn 2004 - including high profile bids such as Comcast's offer for Disney - has led to more coporates seeking insurance against the cost of fending off the bids. Last year there were 16 hostile bids in the UK, compared to just eight in 2002. In Europe last year, hostile offers totaled $56 billion, the highest since 1999.
Specialist insurer Hiscox says it has seen a large rise in enquiries about its takeover insurance, which provides cover for all the direct costs associated with the defense of a hostile takeover bid. Hiscox says the cost to a smaller company of defending a hostile bid can be as much as 2.5% of the bid value. In some cases, the cost has been as much as 10% of the bid value. Larger companies tend to spend up to 1% of the bid value.
Anka Taylor, enterprise risk underwriter at Hiscox, says: "On the back of high-profile companies like Six Continents becoming hostile targets last year, and with risk now at the top of the corporate agenda, mroe companies are thinking about how they can best protect themselves against predators.