MetLife expands in Chile, buys FP Provida for $2 billionStaff writer ▼ |
MetLife will conduct a public cash tender offer for all of the outstanding shares of Provida, and BBVA has agreed to transfer its 64.3% stake to MetLife. Assuming all publicly-held shares are tendered, the purchase price, which MetLife will fund from its existing cash balances, would be approximately $2 billion.
Provida shareholders are expected to receive from Provida, prior to the closing, dividends representing excess cash as well as the proceeds from the sale of Provida's minority stakes in other businesses in Mexico and Peru, which are not being acquired by MetLife.
"With this acquisition, MetLife is delivering on a key component of our strategy – expanding our presence in emerging markets. The acquisition also supports our focus on shifting our business mix to less capital intensive products. We expect it to be immediately accretive to earnings," said Steven A. Kandarian, chairman, president and chief executive officer of MetLife.
With the acquisition of Provida, MetLife's operating earnings from emerging markets are expected to grow from 14% today to approximately 17%. At current exchange rates on an unaudited IFRS accounting basis, net income for the businesses to be acquired, based on information publicly filed by Provida, was approximately $189 million for the 12 month period ended September 30, 2012.
"The assets, customers and intellectual capital this transaction brings into the MetLife family of businesses will transform our operations in Chile. We have great appreciation for the Provida franchise, and we believe their talented employees will be key to helping us reach our growth targets in the market," said William J. Wheeler, president, the Americas, MetLife.
The transaction, approved by the board of directors of MetLife and anticipated to close in the third quarter of 2013, is expected to provide operating earnings accretion of approximately $0.05 per share in 2013 and $0.15 per share in 2014. As of September 30, 2012, Provida had $45.3 billion in assets under management and 1.8 million contributors, both of which are the most in the Chilean pension industry. ■