By Jennifer Chiou
New York, July 23 - Tokio Marine Holdings, Inc. and Philadelphia Consolidated Holding Corp. announced that they have entered into a definitive agreement under which Tokio Marine will acquire all outstanding shares of Philadelphia Consolidated.
Under the agreement, Tokio Marine will acquire the shares at $61.50 each in cash through its wholly owned subsidiary, Tokio Marine & Nichido Fire Insurance Co., Ltd., for a total transaction value of $4.7 billion.
The agreement provides certain termination rights for both Philadelphia Consolidated and Tokio Marine. Upon termination under certain circumstances, Philadelphia Consolidated will be obligated to pay Tokio Marine a termination fee of $141 million and reimburse Tokio Marine for up to $15 million of its reasonable and documented out-of-pocket expenses, according to an 8-K filing with the Securities and Exchange Commission.
The transaction is expected to close in the fourth quarter.
The companies said that the acquisition of Philadelphia Consolidated marks Tokio Marine's significant expansion into the U.S. market and effectively complements Tokio Marine's recent international growth initiatives.
"The acquisition of Philadelphia Consolidated is consistent with our aspirations of expanding globally and realizing a well-balanced business portfolio," Shuzo Sumi, president of Tokio Marine, said in a news release.
"Combined with the recently completed acquisition of Kiln, we have established a strong presence in both key U.S. P&C and London insurance markets."
As previously announced, Tokio Marine entered the Lloyd's market with the acquisition of Kiln in March.
The release added that the profits and losses of Philadelphia Consolidated will be consolidated into Tokio Marine's financial statements from fiscal year 2009 and will deliver greater earnings consistency throughout the insurance pricing cycle.
The companies' boards have unanimously approved the transaction, and key family shareholders representing about 18% of Philadelphia Consolidated's outstanding shares have agreed to vote in favor of the transaction.
The acquisition is subject to the approval of Philadelphia Consolidated shareholders and the approval of various regulatory authorities in Japan and the United States, as well as other customary closing conditions.
Based in Tokyo, the Tokio Marine Group operates in the property and casualty insurance, reinsurance and life insurance sector globally with a presence in about 40 countries/areas.
Based in Bala Cynwyd, Pa., Philadelphia Consolidated designs, markets and underwrites commercial property/casualty and professional liability insurance products.
| Acquirer: | Tokio Marine Holdings, Inc.
|
| Target: | Philadelphia Consolidated Holding Corp.
|
| Announcement date: | July 23
|
| Transaction total: | $4.7 billion
|
| Price per share: | $61.50
|
| Termination fee: | $141 million plus up to $15 million for expenses
|
| Expected closing: | Fourth quarter
|
| Stock price of target: | Nasdaq: PHLY: $35.55 on July 22
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
