(Reuters) - Shares in Novae Group (L:NVA) rose about 2 percent on Friday after Axis Capital (N:AXS), a Bermuda-based speciality insurer and reinsurer, raised its takeover offer for the Lloyd's of London insurer to about 477.6 million pounds.
Last month, Novae Group had agreed to be taken over by Axis Capital for 467.6 million pounds in cash, representing a 700 pence per share offer with a hefty premium to the London-based insurer's closing price from a day before the announcement.
However, the two companies said in a joint statement that they had agreed on a raised 715 pence per share offer.
"By offering Novae shareholders an improved cash offer, Axis aims to bring certainty to the transaction," Axis Capital said in the statement, which was made after London markets closed on Thursday.
Novae's shareholder Neptune had said in July that the offer undervalued the company, and a fair offer would be at least 5 or 6 percent higher than Axis Capital's initial bid.
Neptune said Axis Capital had bid after a "torrid" nine months for Novae, which has been hurt by lower than expected underwriting contributions and changes to Britain's Ogden rule, a tool for calculating personal injury and accident claims.
Novae's board had unanimously recommended the sweetened offer to its shareholders, Axis Capital said on Thursday.
"Although this move is likely to lead to speculation that a counter-bid may be possible, we remain of the view that this is unlikely," Eamonn Flanagan analyst at Shore Capital, said.
The acquisition of Novae, which covers property, casualty, marine, aviation and political risk, would create a roughly $2 billion player in the London speciality market.
Novae's shares have risen 20 percent since Axis Capital's first offer.
Insurers have been preparing for a wave of mergers and acquisitions, as valuations in the Lloyd's insurance market became more attractive to overseas buyers due to a fall in the value of the pound after Britain voted to leave the European Union.
Lloyd's companies such as Hiscox (L:HSX), Lancashire (L:LRE) and Beazley (L:BEZG) have long been seen as acquisition targets, and insurers Amlin, Brit and Catlin have all been snapped up by overseas insurers in recent years.
Novae shares were trading at 710.4 pence at 0720 GMT.