Both Ace Ltd. (NYSE: ACE) and Chubb Corp. (NYSE: CB) announced that they have entered into a definitive agreement in which Ace will acquire Chubb. Shareholders of Chubb will receive $62.93 per share in cash and 0.6019 shares of Ace stock, valuing the transaction at roughly $125.93 per share, or about $28.3 billion in aggregate.
The endgame for this deal is for Ace and Chubb to create a global leader in commercial and personal property and casualty insurance.
The combined company will remain a growth company with complementary products, distribution and customer segments; a shared commitment to underwriting discipline and outstanding claims service; and substantially increased data to drive new, profitable growth opportunities in both developed and developing markets around the world.
Ultimately this deal will provide flexibility for the new company to invest in people, technology products and distribution. At the same time, the balance sheet will elevate the combined company into the elite group of global property and casualty insurers.
At the end of December 2014, on an aggregate basis, the combined company had total shareholders’ equity of nearly $46 billion, as well as cash, investments and other assets of $150 billion.
Shares of Chubb were up about 30% at $123.82 on Wednesday. The stock has a consensus analyst price target of $102.18 and a 52-week trading range of $86.40 to $129.31. The company’s market cap is roughly $28 billion.
Ace shares were up nearly 3% at $104.67, in a 52-week trading range of $99.45 to $117.89. The consensus price target is $119.33. The market cap is $34 billion.
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