Helvetia Holding AG agreed to buy a majority stake in Nationale Suisse in a transaction valuing the company at about 1.8 billion Swiss francs ($2 billion) to create Switzerland’s third-largest insurer.
Helvetia is offering 80 francs in cash and shares for Nationale Suisse, whose board welcomed the bid, St. Gallen, Switzerland-based Helvetia said in a statement today. That’s 26 percent more than the closing price on July 4, the most recent trading day.
The merged company will have premium volume of about 9 billion francs and have a profit potential of more than 500 million francs, Helvetia said. The insurer forecast annual cost savings of 100 million francs to 120 million francs.
“The combination of the two insurance groups is the natural fit, but the price paid appears on the high side,” Stefan Schuermann, a Zurich-based analyst with Vontobel, wrote in a note to investors. “We expect the deal to go through and prosper under the strong Helvetia brand name.”
Nationale Suisse shares rose 25 percent to 79.25 francs at 10:15 a.m. in Zurich trading. Helvetia declined 1.4 percent to 406 francs, bringing its decline this year to 10 percent.
Helvetia said it will pay 52 francs a share and 0.068 new Helvetia shares for each Nationale Suisse share. It’s bidding for all the 22.1 million shares except a 19 percent stake already owned by Helvetia and Patria cooperative.