Royal & Sun Bids for Orion Capital

Britain’s Royal & Sun Alliance Insurance Group launched an agreed-upon cash takeover bid worth about $1.36 billion for U.S. specialty insurer Orion Capital Corp. The takeover would double Royal & Sun’s U.S. presence and move it further away from lower-margin insurance lines to higher-margin specialty insurance lines such as the nonstandard auto and workers’ compensation policies that Farmington, Conn.-based Orion sells. Royal & Sun said it would bid $50 a share for Orion, a premium of more than 20% over its Friday close. The company expects the purchase to result in savings of about $50 million a year. The deal is expected to be completed in the fourth quarter of 1999. Royal & Sun’s share price slid sharply in London, partly because some analysts believe it is overpaying for Orion, particularly after goodwill included in the U.S. measure of net assets was deleted. Orion shares jumped $6.56 to close at $47.31 on the New York Stock Exchange.