MetLife is buying Chile's largest pension business AFP Provida SA for approximately $2 billion, expanding the US insurance giant's presence in the emerging markets.
Under the terms of the agreement with Spanish banking major BBVA SA, Provida's 64-per cent shareholder, MetLife will tender an offer of around $6.04 per share for all of the 331 million outstanding shares of Provida, including the BBVA's stake and free float. The deal also includes Provida's small asset management business in Ecuador.
The total value of the transaction, including the publicly-held shares, is approximately $2 billion.
Besides, Provida shareholders are expected to get $340 million or about $1.03 per share in dividends and also proceeds from the sale of Provida's minority stakes in its businesses in Mexico and Peru, which are not part of the deal.
MetLife chairman and chief executive officer Steven Kandarian said in a statement: "With this acquisition, MetLife is delivering on a key component of our strategy – expanding our presence in emerging markets,"
"MetLife is a leader in both life insurance and annuities in Chile, and Provida will further strengthen our position by adding the country's top pension franchise. The acquisition also supports our focus on shifting our business mix to less capital intensive products,'' he further stated.
Santiago-based Provida had assets worth over $45 billion under its management and 1.8 million customers, as at the end of fiscal 2012 ended 30 September. For the year ended September 2012, Provida reported a net income of $189 million.
"The assets, customers and intellectual capital this transaction brings into the MetLife family of businesses will transform our operations in Chile," said William Wheeler, MetLife's president for the Americas.
Metlife intends to fund the acquisition from its existing cash reserves.
The transaction, already approved by the Metlife board, is expected to close in the third quarter of 2013, subject to regulatory approvals and other customary closing conditions.
The purchase will help Metlife increase its operating earnings from emerging markets by three per cent to around 17 per cent, the company said.
Metlife expects the transaction to be immediately accretive to its earnings, by adding approximately 5 cents per share in 2013 and 15 cents per share in 2014.
The tender offer will be conducted in Chile and in the US, Metlife said.
However, some analysts feel that the offer price was lower than market expectations. Further to the announcement, shares in Provida, which has a market capitalisation of about $2.4 billion, plunged 5.4 per cent to 3283.50 Chilean pesos ($6.96) Friday in Santiago, its biggest fall in eight months.
|
