Financial Services

Dutch insurer NN to buy smaller rival Delta Lloyd for €2.5bn

Delta Lloyd says capital concerns influenced decision to accept NN Group’s offer

Delta Lloyd, which had rejected an initial unsolicited €5.30 per share offer as insufficient, accepted an offer of €5.40 per share in cash. Photograph: iStockPhoto

Fri Dec 23 2016 - 17:20

Dutch insurer Delta Lloyd has reached agreement to be taken over by bigger rival NN Group, the two companies announced on Friday, after NN nudged up its earlier unsolicited offer by 1.9 per cent to €2.5 billion.

NN Group said the deal would cement its leading position in life insurance in the Netherlands, increase assets under management by €60 billion, and lead to "double-digit" dividend increases starting in 2018.

For Delta Lloyd the agreement caps a turbulent two-year period which included the departure of top executives after clashing with the Dutch Central Bank, and two new share issues to strengthen its capital base. Delta Lloyd shares are down more than 50 per cent since July 2015.

“Today the uncertainty around our company has come to an end,” Delta Lloyd chief executive Hans van der Noordaa told investors on a conference call.

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Initial offer

Delta Lloyd, which had rejected an initial unsolicited €5.30 per share offer as insufficient, accepted the current offer of €5.40 per share in cash.

In a statement, Delta Lloyd acknowledged that continuing capital concerns influenced its decision to accept NN Group’s offer.

NN Group’s offer equates to a 55 per cent premium to Delta Lloyd’s average share price in the three months prior to NN’s initial bid on October 5th. Delta Lloyd shares closed on Thursday at €5.33 and were trading at €5.297 at 9.22 am on Friday.

The deal is expected to close in the second quarter of 2017, pending regulatory approval.

NN Group said it expects a 10 per cent return on investment on the deal, which would reduce its solvency ratio to 185 per cent of the minimum requirement on a pro-forma basis in the third quarter. As of the second quarter, NN Group’s solvency ratio was 252 per cent.

– (Reuters)

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