Property and casualty insurer Chubb (NYSE:CB) on Thursday offered to acquire smaller rival Hartford Financial Services Group (NYSE:HIG) in a $23.24 billion cash-and-stock deal.
Chubb’s $65-per-share offer represents a premium of 13.2% to Hartford’s last close of $57.41.
Hartford earlier in the day said it received a takeover bid from Chubb, but did not disclose the financial details of the offer.
Chubb in its recent statement said it has not yet received a response from Hartford to its proposal, adding that even if a deal is agreed upon, its terms, structure or timing cannot be assured.
A deal between The Hartford and Chubb would be the biggest in the sector since Aon’s $30 billion acquisition of Willis Towers Watson last year, and the largest in the U.S. P&C insurance space since Chubb was created in its current form in January 2016.
Then, ACE bought Chubb for $28.5 billion, with the combined company retaining Chubb’s branding.
In a note, Wells Fargo analysts called The Hartford’s small-business insurance franchise the main draw for Chubb, which currently focuses on covering mid-sized and large companies.
Chubb has around $9.4 billion of excess capital to fund any transaction.
They noted that previous deals in the P&C space valued companies at upwards of 1.8-times book value, likely seen as a baseline for negotiation by The Hartford, which traded at 1.14-times prior to Thursday’s news. A 1.75-times valuation would price The Hartford at $30 billion.
CB shares dipped $1.48 to $166.65, while HIG shares lost 15 cents to $68.00
Related Stories
