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Nationwide Financial Agrees to $2.4 Billion Buyout

Nationwide Mutual Insurance Co. said on Aug. 6 that it will buy out its publicly traded retirement savings company Nationwide Financial Services Inc. for about $2.4 billion.

The diversified insurance company will acquire all of the outstanding Class A shares of Nationwide Financial for $52.25 per share in cash, a 13 percent premium over the stock’s Wednesday closing price of $46.45, and an 11 percent premium over the company’s original offer in March.

The deal is valued at $2.4 billion based on about 46 million Class A common shares outstanding as of May 2, according to a regulatory filing.

Columbus, Ohio-based Nationwide, which sold a minority stake in Nationwide Financial in an initial public offering in 1997, currently owns all of the outstanding Class B shares, or a 66.3 percent equity stake. The company also holds 95.2 percent of the combined voting power of Nationwide Financial shareholders.

The deal, which is subject to shareholder and regulatory approval, is expected to close by the end of this year or early in 2009.

Nationwide and certain affiliates have agreed to vote all of their Nationwide Financial shares in favor of the deal, assuring that shareholder approval will be obtained.

Nationwide made a surprise bid to buy out the affiliate for $47.20 per share, or about $2.2 billion, in cash in March.

“While Nationwide Financial’s current structure has served us well over the past decade, our ability to grow and meet the needs of our customers over the next decade and beyond will benefit from a simpler and more customer-centric business model,” Mark Thresher, Nationwide Financial president and chief operating officer, said in a statement.

Separately, Nationwide Financial said Wednesday that its second-quarter profit fell 57 percent on investment losses related to the upheaval in the capital markets.

Shares jumped $5, or 10.8 percent, to $51.45 in after-hours trading. Shares have traded between $37.42 and $60.98 in the past 12 months.