Shares digital

Bidders for Omega Insurance (OIH:AIM) will pay around £2 a share, a premium of 23% on today's 163p share price – that's the word going around the City. Last month the specialist property insurer revealed discussions with potential bidders sending the shares shooting up.

Since then, however, all has gone quiet. But analysts at independent broker Shore Capital believe management is holding out for a higher offer – and will succeed, as larger rivals are desperate to make acquisitions.

'There is a lot of interest, particularly from Bermuda,' comments Shore analyst Eamonn Flanagan. 'A lot of the Bermuda companies are monoline, whereby they write only one line of business. The rating agencies say these companies are too specialised and are demanding they hold more capital. The options are write less business, raise equity or diversify.'

Of the three choices, Flanagan believes diversification through acquisition is the most likely outcome. He adds that previous buyers of insurance businesses have paid around twice net asset value (NAV). Last week Omega revealed a NAV per share in its finals of $2.09, or about £1, pointing to a take out price of around £2.

Shares raced up 13% in a day last month when the company revealed the bid interest. A day before bid talks were confirmed, shares were trading at 150p before shooting up to 170p on the news.