Meiji Yasuda Life Insurance Co. said Friday it will buy U.S. insurer StanCorp Financial Group Inc. for about ¥624.6 billion ($5 billion) in what will be one of the biggest takeovers of an overseas company by a Japanese life insurer.
Tokyo-based Meiji Yasuda, the third-largest life insurer in Japan by premium income, aims to expand its business abroad in the face of little room for growth in the fast-graying domestic market.
“This continues the process” of Japanese insurers pursuing takeovers abroad, said David Threadgold, an analyst at Keefe Bruyette & Woods in Tokyo. Japan’s demographics mean that “if you stay at home, you’re a shrinking company.”
Tokio Marine Holdings Inc. said in June it would buy HCC Insurance Holdings Inc. of the U.S. for around $7.5 billion, making it the largest overseas acquisition by a Japanese insurance company.
In February, Dai-ichi Life Insurance Co. bought middle-ranking U.S. life insurer Protective Life Corp. for $5.5 billion. Another major Japanese insurer, Nippon Life Insurance Co., has said it will invest up to ¥1.5 trillion in mergers and acquisitions over three years from fiscal 2015.
The takeover is expected to be complete by March. The deal will cost much more than the approximately ¥250 billion envisioned by Meiji Yasuda for a potential merger and acquisition deal.
Meiji Yasuda Deputy President Hiroaki Tonooka said the purchase price was appropriate considering StanCorp’s growth potential. The Japanese insurer will “make a comprehensive decision” if a good deal comes up in the future, he said.
In recent years, the insurer has been on a buying spree, having expanded into overseas markets in Europe and Asia.
In 2010, it formed a capital alliance with major German insurer Talanx AG and jointly bought a Polish insurer.
Meiji Yasuda President Akio Negishi said StanCorp has “a track record of strong operational and financial performance and disciplined growth.”
“Together, we will provide high-quality, comprehensive insurance services that deliver value to our customers,” he said in a statement.
The deal with closely held Meiji Yasuda includes a 25-day “go-shop” period during which StanCorp can seek competing offers. If another bidder emerges with a better offer, there is a $90 million breakup fee, the statement said.
StanCorp will operate under its brand within Meiji Yasuda’s global structure, the two companies said. StanCorp was founded more than 100 years ago and sells a range of products that companies offer to their employees, like long-term disability and life insurance. It also offers annuities.