(Downtown Portland and Mt. Hood. Photo credit: Amateria1121.)
Meiji Yasuda Life Insurance Company (Tokyo) has entered into a definitive agreement to acquire all outstanding shares of StanCorp Financial Group (Portland, Ore.), also known as The Standard. The acquisition price represents a 50.0 percent premium to StanCorp’s share price as of the close of business on July 23, 2015, and a 49.9 percent premium to StanCorp’s one-month-weighted average share price. The total transaction value is approximately $5 billion. Meiji Yasuda signaled that it intends to fund the transaction, which is expected to close in the first quarter of 2016, through cash and cash equivalents on hand.
“This transaction is an exciting milestone for The Standard and a testament to the strength of our team, financial performance, differentiated customer service and respected brand,” comments Greg Ness, chairman, president and CEO, StanCorp. “While we were not looking for a buyer, Meiji Yasuda’s proposal presented a tremendous opportunity to create value for all of our stakeholders – providing a substantial cash premium to our shareholders while enabling us to maintain our current operations and valued employees.”
Leaders in Group Benefit Insurance
Meiji Yasuda and The Standard are both leaders in group benefit insurance in their respective markets. Meiji Yasuda, founded in 1881 and headquartered in Tokyo, is the oldest and third largest life insurance company in Japan, with the largest share of group insurance in the Japanese market. With over 40,000 employees and 6.5 million customers, Meiji Yasuda specializes in group and individual life insurance, bancassurance and group annuity products, and has assets of $303 billion and premium income of $28 billion. In addition to Japan, Meiji Yasuda has several insurance operations throughout the U.S., Poland, China, Indonesia and Thailand. This transaction significantly expands the scope and quality of Meiji Yasuda’s offerings in the U.S. market, and will help to enhance and accelerate its diversification and international growth, according to a joint statement from the companies.
The Standard, founded in 1906, is a provider of insurance, retirement and investment products and services. Through its subsidiaries marketed as The Standard—Standard Insurance Company, The Standard Life Insurance Company of New York, Standard Retirement Services, StanCorp Mortgage Investors, StanCorp Investment Advisers, StanCorp Real Estate and StanCorp Equities — the company offers group and individual disability insurance, group life and accidental death and dismemberment insurance, group dental and group vision insurance, absence management services, retirement plans products and services, individual annuities, and origination and servicing of fixed-rate commercial mortgage loans.
Primary U.S. Presence
The Standard will become Meiji Yasuda’s primary U.S. presence and partner, operating under The Standard brand within Meiji Yasuda’s global structure. The parties to the transaction anticipate no changes to The Standard’s current operations. Greg Ness and the current management team will continue to lead the business from The Standard’s headquarters in Portland. The Company will continue executing on its strategic plan and will maintain its current brand, employees, distribution channels and product mix. The companies’ joint statement asserts that Standard’s expertise in insurance, retirement and investment products and services, coupled with Meiji Yasuda’s global businesses and resources, will create a stronger and more diversified combined company with total assets of $327 billion.
Key Pillar of International Operations
Meiji Yasuda intends to make The Standard a “key pillar” of its international operations, according to Akio Negishi, the company’s president. “We have been studying opportunities in the U.S. market for some time and The Standard stood out as our ideal partner,” he elaborates. “In addition to our common vision and shared roots in the mutual business, like Meiji Yasuda, The Standard is a leader for group insurance in its market and has a strong franchise, talented management team and employee base, and a track record of strong operational and financial performance and disciplined growth. Together, we will provide high-quality, comprehensive insurance services that deliver value to our customers.”
The boards of directors of both companies have unanimously approved of the acquisition, but the transaction will include a post-announcement “go-shop” designed to provide an opportunity for other bidders to determine whether they are interested in proposing to acquire StanCorp, according to a joint statement from the companies. Accordingly, the merger agreement provides StanCorp an opportunity to solicit competing proposals during a 25-day period. In the event that a bidder makes a qualifying proposal within that initial period which is finalized within 20 days after that initial period, the successful competing bidder would bear a $90 million termination fee. Otherwise, a successful competing bidder would bear a $180 million termination fee.
The merger agreement allows StanCorp to pay out a regular annual cash shareholder dividend prior to the closing of the transaction, in an amount up to $1.40 per share.