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RBS ends takeover talks for Direct Line in favour of IPO

28 Aug 2012

RBS is reported to have ended talks to sell Direct Line to private equity firms in favour of launching a previously planned public listing of the car insurer on the London Stock Exchange.

The initial public offering could happen “in a matter of weeks,” according to a report in the Sunday Telegraph newspaper, the prospectus for which is due for publication late next month.

The news follows reports in July that Direct Line had become the subject of a takeover approach from two separate consortia led by some of the biggest names in private equity.

Blackstone and Bain Capital were understood to have put together a pre-emptive offer, while a separate consortium comprising KKR, Apax and BC Partners also assembled a rival offer.

Potential buyers were expected to pay between £3bn and £4bn for the company, nearly all of it in cash as the insurance industry regulators do not allow leveraged buyouts, the report said.

The report added that the Blackstone-Bain consortium had put together a financing package that was likely to have been approved by regulators.

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