Finance Firm Makes 2nd Bid to Buy Unitrin
In a move to strengthen its life insurance and consumer finance businesses, American General Corp. said Tuesday that it has offered to buy Unitrin Inc., a Chicago-based insurer, for $2.6 billion.
It is the second time American General has offered to buy the company for that amount in recent weeks. Its first attempt, made July 12, was rejected July 26 by Unitrin’s board, Houston-based American General said in a statement.
The first offer was $50.375 a share, or $2.6 billion in cash, for Unitrin’s 51.8 million outstanding shares, American General said.
American General has been expanding its life insurance and consumer finance businesses through acquisitions and by selling off property and casualty lines over the last several years, analysts said.
Unitrin, which is more than one-third American General’s size in terms of revenue, would be among the largest purchases the company has made.
“It would be a significant acquisition for American General,” said Frederick T. Sandburg, an analyst at Kemper Securities Inc.
Unitrin, a holding company with 7,500 employees, offers life and health insurance and consumer loans through subsidiaries primarily in the Midwest and West. It also has a casualty and property insurance business.
American General said its latest offer represents a 30% premium over the value of Unitrin common stock as of July 11 and more than 100% over the current market value of the company’s operating businesses.
As such, the offer is fair and higher than the highest price at which Unitrin shares have ever traded, the American General statement said.
The company indicated that it would consider a higher price should Unitrin demonstrate “additional value” during merger negotiations.
Harold S. Hook, American General chairman and chief executive, said the combined company would serve more than 8 million households and have assets of $50 billion and revenue of $6 billion.
American General officials were not available for further comment; Unitrin officials were not available.
The offer expires Sept. 12 and is subject to a merger agreement between it and Unitrin, American General said. The acquisition would add to earnings per share two years after the deal closes, the company added.
The American General statement was issued after financial markets closed. American General shares closed at $28.25, down 75 cents on the New York Stock Exchange. Unitrin stock closed at $39.75, down $1.50 on Nasdaq.
Unitrin has assets of $4.8 billion.