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Bidders Go Compare Numbers On Esure Takeover

Esure, the motor insurer which owns the price comparison site Go Compare, is being circled by private equity firms and overseas insurance groups amid signs that its founder may be willing to sell his 30% shareholding.

Sky News has learnt that buyout groups thought to include KKR, the New York-based investment giant, have been exploring takeover bids for esure in recent weeks.

The emergence of this interest followed the company's announcement that it would examine options for its price comparison business, including a demerger.

It (Other OTC: ITGL - news) was unclear on Thursday whether any formal approaches have been made to esure's board since its 7 June statement, or whether KKR's interest continued to be active.

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Insiders said that Deutsche Bank (LSE: 0H7D.L - news) , which is advising esure on the possible demerger of Go Compare, has also been asked to field takeover interest in the entire company.

At least one possible overseas insurance company is understood to have hired financial advisers to work on a takeover bid.

Like its rival Comparethemarket, Go Compare spends heavily on advertising, with its ubiquitous opera-singing character underlining the land-grab for market share in a fast-growing industry.

Esure went public in 2013, with its shares priced at 290p, and paid £95m to acquire 50% of Go Compare in 2015.

On Thursday, they were trading at just over 260p, giving the company a market value of £1.04bn.

Peter Wood, esure's founder and one of the insurance industry's most successful entrepreneurs, is said by friends to be willing to consider offers for the whole company.

Mr Wood, who also founded Direct Line (Other OTC: DIISD - news) , owns just under 31% of esure, a stake worth roughly £300m

One source close to the company said it was likely that Mr Wood would want any bidder to pay more than 500p-a-share in order to persuade him to sell.

News (Other OTC: NWSAL - news) of the possible interest in a takeover of esure comes at a significant time for Go Compare and the rest of the online price comparison sector, which has been facing new regulatory remedies proposed by the City and competition watchdogs.

In its statement just over three weeks ago, esure said that since taking full control of Go Compare last year, it had made significant progress, with "growth in insurance comparison, the cost base restructured, and focus given to a wider range of products".

"These actions have underpinned the board's confidence in its guidance for a 20%-30% improvement in Gocompare.com's profitability in 2016," it added.

Mr Wood said: "Now (NYSE: DNOW - news) is the right time to review strategic opportunities for the Gocompare.com business, including a potential demerger, in order to continue to maximise value for our shareholders."

The wider esure Group has also improved its profitability, announcing that last year's pre-tax profit rose by nearly one-third to £134m

Esure and KKR declined to comment on Thursday.