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Admiral Abandons Sale of Stake in Confused.Com

Jul 12, 2007

By Aled Blake

Motor insurance group Admiral yesterday abandoned plans to sell off its price comparison website The company said its private equity suitors were demanding too much control so it has dropped plans to sell a minority stake in the company.

Admiral announced it would retain full ownership of Cardiff- based after ending talks with potential private equity buyers, which had valued the online business at between pounds 600m and pounds 650m.

The Elephant and Diamond insurer said demands made over control of strategy were "more onerous than anticipated" and would have weakened its decision-making ability.

Admiral has not disclosed the size of the stake that was up for grabs, but reports suggest it was looking at selling a 25% holding.

The group put a stake in up for sale in May after receiving a number of approaches from firms interested in buying the business.

In a statement yesterday, the company said, "In response to interest shown, discussions were held with a number of private equity firms about the sale of a minority interest in the Confused business.

"Potential minority investors typically expressed an interest with an implied valuation of the entire business in the range of pounds 600m to pounds 650m.

"However, the corporate structure and governance demanded by minority investors was significantly more onerous than the board had anticipated.

"The board has therefore concluded that this weakening in its flexibility to determine the strategy of Confused would restrict the ability to maximise Confused's potential as part of the Admiral Group in the medium to long term.", run by managing director Debra Williams, has grown rapidly since its launch in January 2003.

The statement added, "The site last year provided nine million quotations and is expected to achieve earnings of around pounds 30m this year as it seeks to branch out of the car insurance market into other areas.

"It is for these reasons that the board at present believes that it is in our shareholders' best interests for the group to retain a 100% interest in Confused and to continue to follow our clearly defined growth strategy for the business.

"That strategy is focused on maintaining Confused's strong market share of car insurance price comparison; on maximising the value created for shareholders from that position; and on exploiting fully the potential for Confused derived from the growth of price comparison in other product areas."

Price comparisons sites have attracted substantial interest in recent months, with North Wales-based announcing on Wednesday that it may be valued at more than pounds 1bn when it lists on the stock market at the end of the month.

The firm revealed a proposed price range for its shares of between 170p and 210p - valuing the group at between pounds 845.9m and pounds 1.04bn.

Chief executive Simon Nixon, who co-founded the business seven years ago, could net pounds 127m when he sells around 18% of his holding in the group later this month.

Co-founder Duncan Cameron, who was recently bought out for pounds 162m after agreeing to sell the bulk of his 47% stake, could net a further pounds 47.3m if shares list at the top end of the range.

Mr Cameron set up the business with chief executive Mr Nixon in 1999, but left five years ago and had reportedly been seen as an obstacle in the firm's path to an initial public offering before agreeing to sell his stake. was valued at up to pounds 1bn by analysts at Lehman Brothers after it emerged that Admiral was considering selling a stake.

It is thought that price may have also played a part in Admiral's decision not to sell a stake in, with bankers at Merrill Lynch said to have been looking for an offer that would value the business at around pounds 700m.

(c) 2007 Western Mail. Provided by ProQuest Information and Learning. All rights Reserved.

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