Dai-ichi Life Insurance Co. Ltd’s share price up, to acquire Protective Life Corp. in a 5.7-billion-dollar deal

The second-biggest life insurer in Japan by premium revenue – Dai-ichi Life Insurance Co. Ltd revealed that it will acquire the US-based Protective Life Corp. The two companies made an official joint statement, explaining that the Japanese company will pay 582.2 billion yen (5.7 billion dollars) to acquire the US company. The acquisition is considered the largest foreign deal made by a Japanese insurance company.

The President of Dai-ichi Life Insurance Co. Ltd – Mr. Koichiro Watanabe said in the statement, which was cited by the Wall Street Journal: “We are pleased to be entering the U.S. life insurance market by bringing such an outstanding company as Protective into our portfolio.”

According to the joint statement of the companies, Dai-ichi Life Insurance will purchase all shares of Protective Life Corp. at the price of 70 dollars a share in cash. The price equals to about 34% premium over the closing stock price of Protective Life last Friday. Dai-ichi made a separate regulatory filing, explaining that part of the acquisition is to be funded by issuing up to 250 billion yen in new shares.

The purchase follows the trend of a large number of Japanese insurers, which are seeking to expand their reach overseas due to the decreasing demand in their home market. By finalizing the deal, Dai-ichi will get access to customers in the U.S., which is considered beneficial in order to consolidate its positions.

According to the joint statement, when the deal is officially sealed, it is expected to create the 13th biggest global insurer with total assets that amount to 424 billion dollars.

The President and Chief Executive Officer of Protective Life Corp. – Mr. John D. Johns said in a telephone interview for Bloomberg: “This is the perfect set up for us, we think, in order to leap forward with our strategic plans. We will be the growth platform for Dai-ichi here.” As reported by the Wall Street Journal, Mr. Johns also said: “We have been encouraged by Dai-ichi senior management to keep our focus on doing the kind of acquisitions that weve so successfully done in the past. We think that is another big opportunity for growth.”

Dai-ichi Life Insurance Co. Ltd added 3.39% to close at 1,499 Japanese yen per share yesterday, marking a one year change of +8.00%. According to the information published on the Financial Times, the 14 analysts offering 12-month price targets for Dai-ichi Life Insurance Co. Ltd have a median target of 1,885, with a high estimate of 2,450 and a low estimate of 1,100. The median estimate represents a 30.27% increase from the last price of 1,447.