American General to Buy USLife in $1.8-Billion Deal

American General Corp. will acquire USLife Corp., a rival financial services company with major life insurance operations, for $1.8 billion in stock, the companies said Thursday.

The planned acquisition comes amid a major consolidation in the life insurance industry and follows weeks of speculation that New York-based USLife might be a takeover candidate.

American General, based in Houston, said it would pay $49 worth of its own common stock for each share of New York-based USLife. American General’s shares edged up 37.5 cents to close at $41.875, and USLife soared $5.25 to close at $47, both on the New York Stock Exchange.

“This merger represents the largest transaction in American General’s history and is an outstanding strategic fit which offers a unique opportunity to combine two of the premier providers of life insurance and financial services in the nation,” American General Chief Executive Robert M. Devlin said in a statement.

USLife Chairman Gordon Crosby told investors he does not expect any jobs to be eliminated as a result of the merger.

He said there would be cost savings, that decisions about senior management of the combined company had not yet been made and that the deal includes a $48-million breakup fee.