ZURICH - Swiss insurer Helvetia Holding is acquiring rival Nationale Suisse in a cash-and-shares deal worth about CHF 1.8 billion ($2 billion) to create Switzerland's third-largest insurer in terms of premiums written.
Ahead of the merger of the two companies, backed by the Nationale Suisse board, Helvetia will be making shareholder's of Nationale Suisse a public tender offer valued at CHF 80 per Nationale Suisse share, 26 percent more than the July 4 closing price.
Helvetia currently owns 18.7 percent of Nationale Suisse's shares. Helvetia Monday published the pre-announcement of the public tender offer and intends to publish the offer prospectus around 8 August 2014.
"The combination of Helvetia and Nationale Suisse will mark the creation of a strong Swiss insurance group that will have a leading position in the domestic market, attractive positions in selected European markets and international growth potential with the Specialty Lines division," Helvetia said in a statement Monday.
Erich Walser, Chairman of the Board of Directors of the Helvetia Group in a statement said: "Helvetia and Nationale Suisse will be forming a unique insurance group with strong foundations and good prospects for success.
"By joining forces, we are providing both shareholders and customers alike with a significant upside potential. For the employees, a healthy company with a strong domestic market and international orientation is an attractive employer. Strong capitalisation and stable shareholders base will afford the company the security to consistently and successfully pursue its strategy."
The insurance group resulting from the combination of Helvetia and Nationale Suisse will generate a premium volume of around CHF 9 billion and have a profit potential of more than CHF 500 million, Helvetia stated.
To operate under the Helvetia brand name post the merger, it will enjoy a strong position in Switzerland given the proven strengths of both companies.
The transaction is planned to conclude in the second half of 2014, subject to the approval of the shareholders of Helvetia Holding AG, those of National-Versicherungs-Gesellschaft AG and the appropriate competition and regulatory authorities.
Dr. Andreas von Planta, Chairman of the Board of Directors of Nationale Suisse, stated: Helvetia is the ideal partner for Nationale Suisse both in Switzerland and abroad. The Board of Directors of Nationale Suisse therefore recommends that its shareholders accept Helvetia's offer"
.Both Helvetia and Nationale Suisse are able to look back on a long and successful company history, a similar corporate culture and a local presence in Basel.
The combination will reinforce Helvetia as Switzerland's top-3 insurer, allowing it to become one of the country's leading multi-line insurers. With a premium volume of over CHF 5 billion, the domestic market will remain the main pillar of the combined group.
The good balance between life and non-life business, coupled with multi-channel customer access as well as a nationwide sales force, unique partnerships with banks and the direct insurer smile.direct, offer ideal conditions for successful development, Helvetia stated.
The head office of the newly formed Helvetia Group and the management of the non-life insurance will remain in St.Gallen, whereas Basel has been confirmed as the head office of Helvetia Switzerland and will be further strengthened. The offices in Basel are to become the regional non-life hub from where the Nationale Suisse lines Accident/Health, European Travel Insurance and Credit Life will be further developed. The plan is to quickly implement a joint product and service portfolio, the joint statement said.
The transaction could result in higher profits and dividends for shareholders, Switzerland-based Helvetia said at a news conference in Zurich today.
"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 Holding AG, wrote in a note to investors.
"We expect the deal to go through and prosper under the strong Helvetia brand name."
The new group is expected to have attractive prospects in Europe. In the past, Helvetia and Nationale Suisse both operated in Europe's largest insurance markets (Germany, Italy and Spain), and will now be able to pool their resources.