Sompo Holdings Inc. agreed to buy Bermuda-based insurer Endurance Specialty Holdings Ltd. for about $6.3 billion, the company’s biggest acquisition as it expands outside of Japan.
The buyer offered $93 a share in cash for Endurance, 43 percent more than Monday’s closing price of $64.96. The acquisition is subject to the approval of Endurance’s shareholders and Sompo plans to complete the purchase by March 2017, the Tokyo-based company said in a statement Wednesday.
Sompo, which largely sat out a multi-billion-dollar merger-and-acquisition spree by its peers in the past two years, is joining other Japanese insurers in expanding abroad to counter slowing growth at home. Dai-ichi Life Insurance Co. bought Protective Life Corp. last year, and Sumitomo Life Insurance Co. agreed to purchase Symetra Financial Corp. for about $3.8 billion.
Endurance shares surged 35 percent in New York Tuesday after the Nikkei newspaper reported a deal was imminent and the insurer confirmed it was in talks with the Japanese firm. Sompo closed 2.7 percent higher in Tokyo trading Wednesday.
‘Attractive Market’
“The U.S. is a pretty attractive market for Japanese insurers because you have a declining population in Japan as well as the negative interest-rate environment,” Robert Haines, a senior analyst at CreditSights Inc., said by phone Tuesday. “The conditions are very ripe and conducive for further consolidation in the sector.”
‘Top Pick’
“Endurance is our top pick and a franchise we view as extremely high-quality with an excellent management team,” Quentin McMillan, an analyst at Keefe Bruyette & Woods, said in a note to clients Tuesday. “We do not view the premium as too high for an asset as high-quality as Endurance and see this as a deal in which both sides benefit.”
Endurance, which has operations in the U.S., the U.K., and Bermuda, writes property-casualty policies for risks such as agriculture, marine, and energy. The company also has reinsurance units, which help provide coverage for primary insurance carriers.
Citigroup Inc. and Shearman & Sterling LLP advised Sompo, while Endurance used Morgan Stanley and Skadden, Arps, Slate, Meagher & Flom LLP, according to a statement.
