SOMPO Holdings Inc. agreed to buy Bermuda-based insurer Endurance Specialty Holdings Ltd. for about $6.3 billion, the company’s biggest acquisition as it expands further outside of Japan.
The Tokyo-based insurer offered $93 a share in cash for Endurance, 43 percent more than Monday’s closing price of $64.96. The acquisition is subject to the approval of Endurance’s shareholders and SOMPO plans to complete the purchase by March 2017, the Tokyo-based company said in a statement Wednesday.
SOMPO, which largely sat out a multi-billion-dollar acquisition spree by its peers in the past two years, is now joining other Japanese insurers in expanding abroad to counter slowing growth at home. Dai-ichi Life Insurance Co. bought Protective Life Corp. last year, and Sumitomo Life Insurance Co. agreed to purchase Symetra Financial Corp. for about $3.8 billion.
The offer price “is on the high end of the range because you usually pay a 30 percent to 40 percent premium on a regular M&A,” said Steven Lam, a Hong Kong-based analyst at Bloomberg Intelligence. “Japanese insurers don’t seem to be good at bargaining.”
Endurance shares surged 35 percent in New York Tuesday after the Nikkei newspaper reported a deal was imminent and the insurer confirmed it was in talks with the Japanese firm. SOMPO closed 2.7 percent higher in Tokyo trading Wednesday.
Endurance, which has operations in the U.S., the U.K. and Bermuda, writes property-casualty policies for risks such as agriculture, marine and energy. The company also has reinsurance units, which help provide coverage for primary insurance carriers.
Led by Chief Executive Officer John Charman, Endurance has been expanding through acquisitions after going public in 2003, including last year’s purchase of Montpelier Re Holdings Ltd.