Aviva Takes Over AmerUs for $2.9B

Elena
13 Jul, 2006
New York City

Aviva will pay $69 in cash per AmerUs share, a 10% premium to the closing price of July 6, the day before Aviva confirmed they were in talks. The transaction is expected to be completed in the fourth quarter. Aviva shares fell 0.8% to 707 pence on the LSE.

[R]8:00AM Britain’s Aviva PLC acquires AmerUs for $2.9.[/R]
Britain's largest insurance company Aviva PLC agreed Thursday to acquire U.S. insurance company AmerUs Group Co for $2.9 billion. AmerUs is the largest provider by sales of indexed life insurance products in the United States, and one of the country''s top five providers of indexed annuities. Aviva will pay $69 in cash per AmerUs share, a 10% premium to the closing price of July 6, the day before Aviva confirmed they were in talks. The transaction is expected to be completed in the fourth quarter.

Aviva said it will raise 900 million pounds ($1.7 billion) in new shares at 700 pence ($12.90) each to finance the cash purchase, with the remainder to be paid with debt and money it has on hand. Aviva expects the acquisition will contribute $45 million in annual pre-tax cost savings.

Aviva said the purchase will ‘transform’ its U.S. business and will give it a leading position in the world''s largest savings market. It will combine AmerUs with its Aviva U.S. unit, and the business will use the Aviva name.

Aviva shares fell 0.8% to 707 pence ($13.02) on the LSE.


[R]7:30AM Asian markets fall spurred by U.S. losses and oil worries.[/R]
Asian markets closed lower on Thursday. The Nikkei 225 shed 0.99% to close at 15,097.95. Toyota Motor dropped 2.02% after the Asahi newspaper reported that the automaker intends to revise its domestic sales target downward. Honda Motor losses were restricted to 0.56% after announcing Thursday that its North American sales were better than expected and domestic sales were on target. Among electronics exporters, Canon Inc. fell1.92%, while Toshiba Corp shed 2.07%.

Hong Kong''s Hang Seng Index shed 1.31% to 16,305.48. The China Enterprises Index of Hong Kong-listed mainland companies fell 1.44%. HSBC Holdings, the largest stock in Hong Kong by market capitalization, declined 1.16%. South Korea''s Kospi index edged down 0.9%, while Australia''s benchmark S&P/ASX 200 sank 0.85%. China''s benchmark Shanghai Composite Index declined 4.8% to settle at a two-week low of 1,655.77. Concerns about impending policy tightening combined with selling pressure ahead of a flood of upcoming IPOs to trigger the losses.


[R]6:30AM Europe declines on higher oil prices and geopolitical concerns.[/R]
European markets were lower by mid-morning trading. The U.K. FTSE 100 index lost 0.7% at 5,818, the German DAX Xetra 30 index declined 1.3% at 5,563 and the French CAC-40 index declined 1.1% at 4,885. Britain insurance company Aviva attracted the attention. The company was partially responsible for the insurance sector decline. It traded 1% lower following its statement that it would place shares to partly finance its $2.9 billion purchase of U.S. insurance company AmerUs.

Emap fell 7.2% after the UK media group warned that underlying first half revenues were likely to drop and that trading conditions were likely to remain difficult. Swedish technology company Ericsson shed 0.9%, having announced that jointly owned mobile phone venture, Sony Ericsson, produced a 91% rise in second-quarter net income but average selling price dropped slightly sequentially in the quarter.

German subscription TV provider Premiere AGbucked the downtrend, soaring 23% in the wake of its announcement that it has agreed a deal to market Arena, a new TV channel for the German Bundesliga soccer league, to its cable TV customers.

Oil prices hit a record Thursday as an escalation of violence in the Middle East triggered concerns about stability in the region. Light, sweet crude for August delivery rose 93 cents to $75.88 a barrel. Gold bullion opened Thursday at a bid price of $650.10 a troy ounce, down from $653.40 late Wednesday.

The euro was higher nominally against the dollar Thursday, even though the prospect of higher European interest rates kept gains for the European currency at bay. The euro bought $1.2701 in afternoon European trading, up from $1.2699 in New York late Wednesday. The British pound dropped to $1.8335 from $1.8343 while the dollar fell to 115.43 Japanese yen from 115.52 yen as traders took the opportunity to buy the currency at a cheaper price before an expected interest rate increase from the Bank of Japan.