(Bloomberg) -- Finland’s Sampo Oyj agreed to buy Topdanmark A/S in an all-share deal that valued the target at 33 billion kroner ($4.7 billion), consolidating the insurance landscape in Denmark.

Sampo, which already holds almost half the shares in Topdanmark, said other shareholders will be offered 1.25 new A shares in Sampo for each stock in Topdanmark. The offer represented a premium of 27% to Topdanmark’s last closing price, Helsinki-based Sampo said on Monday before trading started.

Topdanmark shares rose as much as 23% in Copenhagen at the Monday open while Sampo shares declined as much as 3.6% in Helsinki. 

Sampo intends to integrate Topdanmark into its property and casualty unit If that operates in the Nordic region. Before the deal, If had about a fifth of the market across the Nordic countries, except in Denmark, where it had about 6% and Topdanmark 16%, according to 2022 data. In Denmark, If will now be challenging Tryg A/S and Alm. Brand A/S for the No. 1 position, with the three companies holding close to two-thirds of the market.

Sampo first flagged a holding in Topdanmark shares in 2008, and offered to buy the Danish firm in 2016, but fewer than 10% of shareholders accepted the offer then. After the Finnish company divested its more than 20% stake in the Nordic region’s biggest lender, Nordea Bank Abp, a few years ago, analysts speculated the profits could be spent on adding to its Topdanmark stake.

The deal “has been on the cards for some time,” Torbjorn Magnusson, Sampo’s chief executive officer, said by phone. “We have sold our a stake in Nordea, we’ve sold some other businesses.”

Topdanmark shares had closed 30% below a March 2022 peak on Friday, and even with Monday’s gains, the stock didn’t exceed its past record.

“We saw the shareholding in Topdanmark as a long-hanging fruit which is now triggering Sampo to act,” Michele Ballatore, an analyst at KBW, said in a note. “The material share price reduction in Topdanmark since the beginning of the inflationary period may has played a role in that sense.”

Sampo will, at the same time as it issues new shares, set aside €800 million ($855 million) for a share buyback program and for the “potential squeeze-out of Topdanmark minority shares,” it said. The move is aimed “to offset share count dilution from the transaction.”

What Bloomberg Intelligence Says:

“Sampo’s push to acquire all of Topdanmark probably means it won’t make any acquisitions outside the Nordics in the short term, with full ownership making strategic sense and cementing its position as the leading Nordic general insurer. That follows the 2020 purchase of UK auto insurer Hastings. Sampo acquired 49.4% of Topdanmark in 2016 when its last offer failed, with the 27% premium offered now suggesting deal success.”

— Kevin Ryan and Charles Graham, insurance analysts

The offer is “the best and final” and there’s no room to increase the consideration, Sampo said. Topdanmark’s board of directors will unanimously recommend shareholders accept the offer, the companies said. 

“This is a synergy deal,” CEO Magnusson said. “It pays off to be big.”  

In recent years, Sampo has been simplifying its structure after turning itself into a pure-play insurance company following the divestment from Nordea in 2022. Last year, Sampo spun off asset manager and life insurer Mandatum as part of that push.

In the Nordic region, its crown jewel is If, a highly profitable and digitalized firm that offers a range of health, home, travel and other contracts. Sampo also owns Hastings, a UK car insurer.

If has about 4 million customers in the Nordic and Baltic countries. Of the about 1.4 million claims it handles each year, a half are processed within 24 hours of reporting.

Topdanmark, which can trace its history back to 1898, has recently sold its life and pension company as a plan to focus on property and casualty insurance. It employs about 2,100 people and has 110,000 commercial and agricultural clients and 600,000 private customers.

Based on Sampo’s closing share price of €39.29 on Nasdaq Helsinki on Friday, the offer represents a value per Topdanmark share of 366.38 kroner. Sampo said it has conducted a market sounding on certain shareholders in Topdanmark and received positive feedback to the offer.

--With assistance from Steven Arons.

(Corrects history of Sampo’s stake in Topdanmark in fifth paragraph)

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