April 23, 2008 – 9:46 am
DOW JONES NEWSWIRES
Liberty Mutual Group announced plans to acquire Safeco Corp. (SAF) for about $ 6.2 billion in a deal expected to make the combined company the country’s fifth- largest property and casualty insurer and second-largest surety business.
Under the terms of the deal, Liberty Mutual will acquire the insurer for small- and mid-sized business for $68.25 a share in cash, a 51% premium to Safeco’s closing price Tuesday of $45.23.
As part of the deal, expected to close by the end of the third quarter, Safeco will become part of Liberty Mutual’s agency markets unit, which had 2007 revenue of $5.6 billion. Combined, the organization will have about 15,000 independent agencies.
Acquisitive Liberty Mutual is currently the nation’s sixth-largest property and casualty insurer in the U.S. based on its 2007 direct written premium of $ 20.2 billion. Safeco had $5.9 billion.
“Safeco’s operations and product mix complement our existing agency markets operations,” said Liberty Mutual Chairman and Chief Executive
Edmund F. Kelly.
The deal comes at a time when Safeco has been affected of late by dwindling numbers of auto policyholders and higher catastrophe claims. The company’s fourth-quarter net income dropped 33% on higher catastrophe losses from the recent California wildfires.
Safeco CEO
Paula Reynolds said, “This is the opportunity to take West Coast inventiveness and launch it with a global brand at a substantial premium to
Safeco shareholders.”
Safeco postponed its annual shareholder meeting that was to be held May 7, and said it will provide the timing of the meeting as well as a special meeting to approve the deal with Liberty Mutual when it becomes available.
Liberty Mutual, which is owned by its policyholders, doesn’t have publicly traded stock and voluntarily reports earnings.
Source: Money.CNN.com
