ACE to Acquire Chubb in $28.3 Billion Deal
In a major transaction, ACE Limited has agreed to acquire The Chubb Corp. for $28.3 billion in cash and stock.
The two firms said the combined company will have complementary businesses, skills and distribution and greater growth and earnings than the two companies separately.
The balance sheet’s size and strength will elevate the combined company into the elite group of global P/C insurers. 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.
The combined company will use the Chubb name.
The boards of directors of both companies have approved the deal.
Under the terms of the transaction, 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, 2015, 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, 2015.
Upon closing of the transaction, ACE shareholders will own 70 percent of the combined company, and Chubb shareholders will own 30 percent. The consideration represents an approximately 30 premium premium to Chubb’s closing price of $95.14 on June 30, 2015.
Together, ACE and Chubb believe they will create a global leader in commercial and personal property/casualty insurance, with a balance of products and a product mix with reduced exposure to the P/C industry pricing cycle.
They also said the combination will create efficiencies that will allow for investment in people, technology, products and distribution.