Shares in Saga PLC climbed on Wednesday as it said it was holding talks with Belgium’s Ageas SA with regard to a potential partnership arrangement for its Insurance business.

Late Tuesday, the Kent, England-based provider of services to people aged 50 and over had said it was delaying publication of half-year results as it continues to ‘explore partnership opportunities’.

Saga stressed that performance for the first half is in line with expectations and the group remains on track for the full year.

Early Wednesday, Saga confirmed the talks are with Ageas. In response, shares in Saga rose 12% to 125.60 pence in London on Wednesday morning giving it a market value of around £175.3 million.

The confirmation was in response to a Sky News report naming Ageas, which earlier this year tried to buy Direct Line Insurance Group PLC. Sky said Saga wants a deal that would allow it to repay a chunk of its debt pile.

Under the deal, Ageas would make an up-front payment to Saga, with a series of subsequent commission payments, in return for taking over the running of parts of the British company’s insurance operations, Sky said.

For Saga, the transaction with Ageas would enable it to pay down debt and shift to a new operating model aimed at relieving some of the pressure on its balance sheet, Sky reported.

Analysts at Peel Hunt said the ‘key to any insurance partnership deal in our view is the opportunity it offers Saga to spin-off the insurance underwriting business (but retain insurance broking); and de-lever the balance sheet.’

‘We await with interest the outcome of these discussions, which make strategic sense for Saga in our view,’ the broker added.

Copyright 2024 Alliance News Ltd. All Rights reserved.