ACE to acquire Chubb in $28.3 billion deal
NEW YORK—It's an insurance blockbuster: ACE Ltd. (ACE) said Wednesday that it was acquiring Chubb (CB) in a combined cash and stock deal valued at $28.3 billion based on yesterday's closing stock price.
Chubb shareholders will receive $62.93 per share in cash and 0.6019 shares of ACE stock. Upon completion of the transaction, which is expected in the first quarter of next year, ACE shareholders will own 70% of the combined company, and Chubb shareholders will own 30%.
"We are thrilled to announce the acquisition of Chubb, a venerable company with a great brand," said Evan G. Greenberg, Chairman and CEO of ACE in a statement. "This transaction advances our strategy in a meaningful way and represents an outstanding opportunity to create significant value over a reasonable period of time for both ACE and Chubb shareholders.
Greenberg will remain CEO of the combined company. Chubb CEO John Finnegan will become executive vice chairman for external affairs of North America and will help with the integration of the two companies. The company's board will expand from 14 directors to 18 directors with the addition of four independent directors from Chubb's current board.
In the release, the two insurers play up what they say are complementary strengths, with ACE in the U.S. providing a range of products and services for industrial commercial, multinational and upper middle market companies with distribution substantially through a major brokerage presence. Chubb, which is the eight largest property and casualty insurer in the U.S, primarily caters to middle-market commercial customers. It also provides personal lines coverage to high net worth customers in the U.S.
The two companies also have a major presence in global markets. ACE Ltd. is headquartered in Zurich, Switzerland, Chubb in Warren, New Jersey.
Speaking on CNBC's Squawk Box, Mark Dwelle of RBC Capital Markets said the deal combines two strong franchises that will create "a global player almost unrivaled by anyone else."
Chubb stock rose around 36.16% in premarket trading; ACE was up around 12.07%.
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