RSA shares plunge as Zurich pulls out of £5.6bn bid

Costs from the explosions in the Port of Tianjin in China last month mean the Swiss insurer can no longer afford to buy its British rival

Swiss insurer Zurich has pulled out of its offer to buy FTSE 100-listed rival RSA, scrapping a £5.6bn bid that was first announced in July.

Shares in RSA fell more than 20pc in early trading to 400p following the unexpected announcement, while Zurich shares lost 6pc.

Under Takeover Panel rules, Zurich had until 22 September to make a decision - meaning it has pulled out at the last minute, following almost eight weeks of public discussions that as recently as last week were continuing through due diligence on the tie-up.

It is understood that Zurich management decided during a board meeting on Sunday to end the pursuit of a deal for RSA, with the British firm finding out late on Sunday night.

The Swiss giant blamed the costs associated with the explosions in the Chinese Port of Tianjin last month, which have so far hit $275m.

According to a statement by RSA, Zurich found nothing wrong with the company’s books but had to cancel the bid because its own finances had deteriorated.