ACE To Acquire Chubb In $28.3 Bln Cash, Stock Deal

(RTTNews) - Insurers ACE Limited (ACE) and The Chubb Corp. (CB) Wednesday said the Boards of directors of both companies have unanimously approved a definitive agreement for ACE to acquire Chubb in a cash and stock deal valued at $28.3 billion.

The transaction is expected to add immediately to to earnings, and by the third year, it will be accretive to earnings on a double-digit basis. The deal is expected to close during the first quarter of 2016.

Chubb shareholders will receive $62.93 per share in cash and 0.6019 shares of ACE stock. Based on the closing price of ACE stock on June 30, the total value is $124.13 per Chubb share, or $28.3 billion in the aggregate.

The consideration represents an approximately 30 percent premium to Chubb's closing price of $95.14 on June 30.

Upon closing of the transaction, ACE shareholders will own 70 percent of the combined company, and Chubb shareholders, 30 percent.

In the U.S. commercial lines business, ACE provides a broad range of products and services for industrial commercial, multinational and upper middle market companies with distribution substantially through a major brokerage presence.

Chubb is primarily a middle-market commercial, specialty and surety insurer with a broad product portfolio and a major agency presence.

In personal insurance, Chubb is a leading provider of personal lines coverage to high net worth customers in the U.S., while ACE has been increasingly focused on these customers as well.

Outside the U.S., ACE is a premier commercial insurer with a presence in 54 countries. Chubb's operations in 25 countries will complement and deepen ACE's presence.

ACE has a leading market position in global accident and health or A&H and both companies offer complementary personal lines offerings in Canada, Europe, Asia and Latin America.

Evan Greenberg, Chairman and CEO of ACE, will lead the combined entity as Chairman and Chief Executive Officer.

John Finnegan, Chairman, President and CEO of Chubb, will serve as Executive Vice Chairman for External Affairs of North America and will assist with integration.

The combined company will remain a Swiss company with principal offices in Zurich. Chubb's headquarters in Warren, New Jersey, will house a substantial portion of the headquarters function for the combined company's North American Division.

The combination is expected to create a leader in commercial and personal property and casualty or P&C insurance. The new entity will have complementary products, distribution, and customer segments.

As of December 31, 2014, on an aggregate basis, the combined company had total shareholders' equity of nearly $46 billion and cash, investments and other assets of $150 billion.

By the third year after closing, the company expects to realize annual expense savings of $650 million pre-tax where both companies overlap. By year five, earnings accretion is expected to be balanced between revenue and expense-related synergies.

ACE, which closed marginally higher on Tuesday at $101.68, gained 11.4 percent in pre-market activity.

CB rose 0.5 percent to $95.14 on Tuesday, and surged 33.4 percent on Wednesday in pre-market activity.