Insurer Lincoln National Corp said on Monday it agreed to buy smaller rival Jefferson-Pilot Corp for about $7.5 billion in cash and stock to create one of the largest US life insurers.
Under terms of the deal, Jefferson-Pilot shareholders will receive 1.0906 Lincoln shares, or $55.96 in cash, for each of their shares, representing a 9 percent premium over Friday's closing prices for both companies.
The deal, which is subject to shareholder and regulatory approval, is expected to close in the first quarter of 2006, creating a company with a market capitalisation of about $16 billion that will be 61-percent owned by Lincoln shareholders.
"By joining forces we will create a company with enhanced scale, a comprehensive and balanced product portfolio, greater distribution penetration and geographic and market diversity," Lincoln Chairman and Chief Executive Jon Boscia said in a statement. On the New York Stock Exchange, Lincoln shares were down about 0.45 percent to $50.50 while Jefferson-Pilot shares rose nearly 8 percent to $54.70.
In a joint statement, the companies said the deal represents a total blended cash and stock consideration of $55.48 per share with total value of roughly $7.5 billion. That gives Jefferson-Pilot shareholders an 11 percent premium based on the average share closing prices from September 7 to October 7.