|Chubb shareholders will receive US$62.93 per share in cash and 0.6019 shares of ACE stock. — Photo tinnhanhchungkhoan
HCM CITY (VNS) — ACE Limited and The Chubb Corporation announced on Wednesday that the Board of Directors of both companies had approved an agreement under which ACE will acquire Chubb.
Under the terms of the transaction, Chubb shareholders will receive US$62.93 per share in cash and 0.6019 shares of ACE stock.
Upon closing of the transaction, ACE shareholders will own 70 per cent of the combined company, and Chubb shareholders will own 30 per cent.
The consideration represents an approximately 30 per cent premium to Chubb's closing price of $95.14 on June 30, 2015.
Outside the US, ACE is a premier commercial insurer with a presence in 54 countries and a broad product, customer and distribution capability. Chubb's operations in 25 countries will complement and deepen ACE's presence.
The acquisition is expected to create a global leader in commercial and personal property and casualty insurance.
ACE intends to finance the cash portion of the transaction through a combination of $9 billion of ACE and Chubb excess cash plus $5.3 billion of senior notes with a range of maturities to be determined.
ACE intends to target a debt-to-total capital ratio of approximately 20 per cent following the acquisition, within the guidelines for the company's ratings.
The transaction is expected to close during the first quarter of 2016, subject to approval by ACE and Chubb shareholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and regulatory approvals.
Based on the closing price of ACE stock on June 30, the total value is approximately $124.13 per Chubb share, or $28.3 billion in the aggregate.
This is the equivalent of $125.87 per Chubb share using ACE's 20-day volume weighted average share price for the period ending June 30.
As of December 31, 2014, the combined company had total shareholders' equity of nearly $46 billion and cash, investments and other assets of $150 billion.
ACE Limited is the parent company of ACE Group, one of the world's largest multiline property and casualty insurers. — VNS