AMERICAN credit card insurer Affinion Group is toying with buying CPP Group, sending its embattled rival’s shares soaring by more than 40 per cent.
York-based CPP, under the shadow of a Financial Services Authority investigation, said it has received an “initial preliminary approach from Affinion Group, which may or may not lead to an offer being made”.
The company added the approach is at a “very early stage” and declined to comment further.
Shares in CPP closed up 8.5p at 29.5p, valuing it at £50.6m.
CPP, which was priced at 235p per share when it floated on the stock market in March 2010, has been under investigation by the City watchdog since March 2011 for mis-selling. Its products protect wallets, credit cards and mobile phones against loss and theft and it relies on tie-ups with major banks and mobile phone firms.
KBC Peel Hunt analyst Henry Carver said a takeover is a “good solution for CPP and an attractive strategic move for Affinion”.
He added: “I think institutions would take the money now rather than two to three years of uncertainty and volatility.”
Affinion owns brands including Sentinel Gold and PrivacyGuard, and according to its website has worked with banks including Royal Bank of Scotland and Lloyds TSB, offering card and ID theft protection.
It has UK sites in Slough and Portsmouth but is based in Stamford, Connecticut. It did not return calls for comment.