Japan's Dai-ichi Life To Buy Protective Life For About $5.7 Bln

(RTTNews) - Japanese insurer Dai-ichi Life Insurance Co. Ltd has agreed to acquire U.S.-based peer Protective Life Corp. (PL) for about $5.7 billion, the two companies said Tuesday. The deal marks the largest-ever acquisition of a foreign company by a Japanese insurer.

The transaction will create the world's thirteenth largest insurer, with total assets of $424 billion. Protective will become Dai-ichi Life's platform for growth in the U.S., where Dai-ichi Life does not currently have a material operational presence. The deal will enable Dai-ichi Life to gain a new source of income and also expand overseas as it grapples with a shrinking domestic market.

Under the deal, Dai-ichi Life will acquire all outstanding shares of Protective Life for $70.00 per share in cash. The transaction consideration represents a 34 percent premium over Protective's unaffected closing stock price of $52.30 on May 30, 2014.

Tokyo, Japan-based Dai-ichi Life, founded in 1902, is one of the top 20 global life insurers and operates in Japan, Australia, Vietnam, Indonesia, India and Thailand. It is the second-largest private life insurance company in Japan.

Birmingham, Alabama-based Protective Life, whose primary subsidiary, Protective Life Insurance Co., was founded in 1907. The company offers a diverse portfolio of personalized products and services to meet the life insurance, retirement income and asset protection needs of individuals and families in the U.S.

Protective Life said it does not expect any significant changes to its current strategy, day-to-day operations, distribution channels or employee base as a result of the transaction. Protective's President and Chief Executive Officer John Johns as well as its current management team will continue to lead the business from the company's current headquarters.

Koichiro Watanabe, President of Dai-ichi Life said, "We are pleased to be entering the U.S. life insurance market by bringing such an outstanding company as Protective into our portfolio. With a strong leadership team, vibrant and growing retail franchise and long track record of profitable growth organically and through the acquisition and integration of attractive businesses, Protective is the ideal platform for expansion."

The transaction, which has been approved by the boards of directors of both companies, is expected to close by the end of 2014 or early 2015, subject to approval by Protective Life's stockholders, regulatory approvals in Japan and the U.S., and other customary closing conditions.

The transaction will include a pre-vote "market check" that will provide an opportunity for other bidders to determine whether they are interested in proposing to acquire Protective Life.

Accordingly, the merger agreement provides Protective Life an opportunity to solicit competing proposals. In the event the company accepts a competing proposal, it would be required to pay a break-up fee of $140 million.

Dai-ichi Life intends to fund the transaction through cash in hand and supplementary sources if required. In a separate statement, Dai-ichi Life said it will sell new shares for a maximum amount of 250 billion yen to fund the acquisition.

Goldman Sachs is acting as financial advisor to Dai-ichi Life, while Baker & McKenzie and Willkie, Farr & Gallagher are acting as its legal advisors. For Protective Life, Morgan Stanley is serving as financial advisor and Debevoise & Plimpton LLP is serving as legal advisor.

PL closed Tuesday's regular trading session at $58.72, up $0.21 or 0.36 percent on a volume of 2.05 million shares. In after-hours, the stock further gained $4.53 or 7.71 percent to $63.25.

In Wednesday's regular trading on the Tokyo stock exchange, Dai-ichi Life's shares are trading at 1,450.00 yen, up 3.00 yen or 0.21 percent on a volume of 2.38 million shares.