Helvetia Holding AG agreed to buy a majority stake in Nationale Suisse in a transaction valuing the company at about CHF1.8 billion ($2 billion) to create Switzerland’s third-largest insurer.
Helvetia is offering CHF80 [$89.50] in cash and shares for Nationale Suisse, whose board welcomed the bid, St. Gallen, Switzerland-based Helvetia said in a statement today. That’s 26 percent more than the closing price on July 4, the most recent trading day.
The merged company will have premium volume of about CHF9 billion [$10 billion] and have a profit potential of more than CHF500 million [$559 million], Helvetia said. The insurer forecast annual cost savings of CHF100 million [$111.84 million] to CHF120 million [$134 million].
“The combination of the two insurance groups is the natural fit, but the price paid appears on the high side,” Stefan Schuermann, a Zurich-based analyst with Vontobel, wrote in a note to investors. “We expect the deal to go through and prosper under the strong Helvetia brand name.”
Nationale Suisse shares rose 25 percent to CHF79.25 [$88.63] at 10:15 a.m. in Zurich trading. Helvetia declined 1.4 percent to CHF406 [$454], bringing its decline this year to 10 percent.
Helvetia said it will pay CHF52 [$58.16] a share and 0.068 new Helvetia shares for each Nationale Suisse share. It’s bidding for all the 22.1 million shares except a 19 percent stake already owned by Helvetia and Patria cooperative.