07-24-2008, 09:03 AM
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Super Moderator
Join Date: Aug 2006
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The company was purchased by a Japanese company called, Tokio (not TokYo) Marine Holdings Inc. Tokio Marine paid a 73% premium on the stocks on a $4.7billion dollar acquisition. Insiders just made a shit-ton of money if they knew about the merger. Looks as if this could happen more often.
Quote:
Saddled with sluggish growth at home and unburdened by
subprime investments, many cash-rich Japanese firms are once
again hunting for opportunities abroad.
Japanese drug companies, food makers and financial firms
have all joined in the push overseas. Outbound Japanese
acquisitions for 2008 came to $24 billion as of July, nearly
matching the haul for all of last year, according to Thomson
Reuters data.
"This gives us access to the world's largest casualty
insurance market, one that is five times the size of Japan's,"
Tokio Marine Tokio Marine President Shuzo Sumi told a news
conference.
Sumi told Reuters earlier this month that he was looking at
opportunities to acquire U.S. and European competitors to expand
outside Japan, where it still generates four-fifths of its
profits. nT312371
In March the Japanese firm completed the purchase of Lloyd's
of London insurer Kiln Ltd for 442 million pounds ($881
million), to increase its European presence.
The new acquisition will allow Tokio Marine to expand its
U.S. business beyond its current focus on Japanese firms, Sumi
said.
Philadelphia Consolidated is strong in offering niche
insurance products which are relatively shielded from economic
cycles, Tokio Marine Managing Director Shin-Ichiro Okada told
reporters.
The U.S. company offers insurance for institutions such as
adoption agencies and martial arts studios, as well as zoos and
volunteer fire departments, according to its Internet site.
GROW OR DIE
Although little known outside of Japan, the 129-year-old
Tokio Marine has become increasingly aggressive in expanding
overseas. Japanese insurers face limited prospects for expansion
at home given its slow-growth economy and projected decline in
population.
"They face the options of either turning to asset management
or going overseas, and M&A is the most efficient way to do
this," said Hiroaki Osakabe, a fund manager at Chibagin Asset
Management.
The acquisition will likely help diversify Tokio Marine's
business portfolio and help offset its high dependence on the
Japanese market, ratings agency Standard & Poors said in a
statement.
"(Philadelphia Consolidated) has achieved high growth and
strong revenue, supported by robust sales of its specialised
products focused on targeted commercial markets," the ratings
agency said.
Philadelphia Consolidated's net profit totalled $326.8
million in the year to December 2007, up 13 percent from a year
earlier and more than double from two years prior.
BIG BET
The deal represents a large bet on the U.S., even for the
cash-rich Tokio Marine. Unlike its Kiln acquisition -- which was
paid entirely in cash -- the Japanese company will finance about
half of the purchase with cash and half with debt, Sumi told
reporters.
Sumi also described the premium on the stock price as "fair
and appropriate", when considering the opportunity for mid- to
long-term growth in the world's largest economy.
He also did not rule out further acquisitions. "We will
consider what to do when the next opportunity presents itself,"
he said.
Tokio Marine said it expected the transaction to be
completed in the fourth quarter of 2008 and that it would
consolidate Philadelphia's earnings into its financial
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