Aviva shares were sharply higher on Friday after the Times reported multiple parties were circling the insurer after a prolonged period of disappointing share price returns.
Aviva will look good value to potential bidders after the company’s valuation failed to recover fully from the pandemic despite strong underlying performance.
“Is Aviva the next FTSE 100 takeover target? The market certainly seems to think so, judging by the 7% share price jump on Friday. Chatter that foreign players Allianz, Intact Financial and Tryg are among the potential interested parties has fired up the shares, hot on the heels of a bullish broker note earlier this week,” said Russ Mould, investment director at AJ Bell.
“What might they see in Aviva? Well, the business is forecast to have strong free cash flow and excess capital and its valuation is cheap. It has slimmed down in recent years to focus on the stronger parts of the group and there is now an opportunity to increase its position in bulk annuities which looks like a more prosperous market thanks to higher gilt yields.
“Activist investor Cevian Capital is no longer on the shareholder register causing mischief and Aviva is left as one of many stocks on the UK market looking unloved but still offering the potential for long-term value generation.”
Aviva shares were 7% higher at the time of writing in London.