Ping An Insurance Group Co., China’s second-largest insurer, agreed to buy a 48 percent stake in Chinese car website Autohome Inc. from Telstra Corp. for $1.6 billion, extending a shopping spree by the nation’s insurance companies.
Ping An will buy the shares at $29.55 each, according to a statement. That’s 2 percent below the stock’s last close. For Telstra, which bought into Autohome in 2013, the sale will lead to a gain of about A$1.8 billion ($1.4 billion).
Chinese insurance companies, flush with cash from savers, have embarked on a shopping binge. Including Autohome, they’ve announced transactions valued at $14.9 billion so far this year, five times the pace of last year’s deals, according to data compiled by Bloomberg. And that’s excluding the $14 billion offer by a group led by Anbang Insurance Group Co. for Starwood Hotels & Resorts Worldwide Inc., which was later scrapped.
Autohome will “benefit from a strategic investor in Ping An, which has expertise in car insurance and financing,” Telstra Chief Executive Officer Andrew Penn said in the statement Friday.
Ping An’s Profit
Ping An’s profit from vehicle insurance, which accounts for more than 70 percent of the company’s property and casualty insurance operations, dropped 2 percent last year even as premium income from the segment jumped 19 percent, as regulators expanded a reform to liberalize pricing for the business. The insurer held 10.2 billion yuan in cash and equivalents as of Dec. 31, according to its annual report.
While Ping An has recently started looking into overseas assets in the U.S. and Europe amid expectations of a weakening Chinese yuan, “we’re still at a very cautious pace,” Chief Financial Officer Jason Yao said in an interview with Bloomberg Television’s Yvonne Man on March 16.
Telstra, which expects to book gains from the sale during the half-year ending June, will keep a 6.5 percent stake in Autohome, according to the statement.
Telstra rose 1.6 percent to close at A$5.24, while Ping An fell 1.1 percent to HK$37.85 before announcing the deal.