(BRK.A), (BRK.B)
In a consolidation in the insurance industry, Berkshire Hathaway’s minority position in Symetra Financial Corporation will be bought out as the insurance company merges with Sumitomo Life Insurance Company.
A Big Win for Berkshire
The merger will give Berkshire a 32% boost on its Symetra stake, as it receives an all cash offer for its shares. The tender offer will give Berkshire a windfall worth $144 million.
Berkshire and other Symetra shareholders will receive $32.00 per share in cash at closing, plus a previously announced special dividend of $0.50 per share in cash, which is payable on August 28, 2015 to Symetra shareholders of record as of August 10, 2015.
The total combined transaction consideration of $32.50 per share is approximately $3.8 billion in aggregate and represents a 32% premium over Symetra’s average stock price of $24.64 for the 30 days ending August 5, 2015.
Berkshire Hathaway currently owns 17% of Symetra and has agreed to vote in favor of the transaction.
White Mountains Insurance Group, Ltd., which owns 18% of Symetra, has also granted its approval for the merger.
Best Wishes, Warren
Warren Buffett in a statement said, “Tom and his management team have done a good job running the company and have executed a great deal for shareholders. I wish them the best for future success under their new owners.”
Founded in 1907, Sumitomo Life provides traditional mortality life insurance, nursing care, medical care and retirement plans through sales representatives, insurance outlets, the Internet and bancassurance. As of March 31, 2015, Sumitomo Life had $229 billion in assets, approximately 6.8 million customers and 42,000 employees.
Symetra was founded in 1957 and is based in Bellevue, Washington. The company provides employee benefits, annuities and life insurance through a national network of benefits consultants, financial institutions and independent agents and advisors. As of June 30, 2015, Symetra had $34 billion in assets, approximately 1.7 million customers, and 1,400 employees nationwide.
Symetra will become Sumitomo Life’s platform in the U.S., where Sumitomo Life does not currently have a material operational presence. Symetra’s President and Chief Executive Officer, Thomas M. Marra, and the current management team will continue to lead the business from Symetra’s headquarters in Bellevue. Symetra will maintain its current brand, employees, distribution channels and product mix.
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.