Aegon NV, the big Dutch insurance conglomerate with U.S. headquarters in Baltimore, completed its $10.8 billion stock and cash acquisition of Transamerica Corp., a San Francisco-based insurance giant, yesterday.
The purchase created the third-largest life insurance company in the United States.
Aegon USA, which operates the Monumental Division and the Aegon Special Markets Group, plans to shift its headquarters to San Francisco from Baltimore as a result of the deal. However, few of the 800 employees in Baltimore will be affected, Aegon said.
Under the deal, Transamerica shareholders will receive a cash payment of $23.40 plus 0.71813 Aegon shares in exchange for each Transamerica share, or about $78 in cash and stock for each share held.
The Dutch insurer is also assuming $1.1 billion in Transamerica debt.
Aegon shares closed at $72.125 yesterday, down $1.1875. Transamerica shares dropped $1 to $74.5625.
Kees J. Storm, Aegon's chairman, said the company was glad to close on the deal, noting that Transamerica will strengthen Aegon's position in U.S. markets for life insurance, investment advice and retirement products.
"It gives us entry into new markets and provides strong additions to some of our core businesses," Storm said.
"We believe that our distributors, clients and shareholders will benefit from the opportunities that this combination offers for many years to come."
Aegon, which operates worldwide, generated about half of its $367 million first-quarter profit this year from sales in the United States.
The Transamerica name and logo will be retained as the principal identification for the Transamerica businesses and will also be extended to the businesses of Aegon USA when considered "appropriate and beneficial," the company said.
Donald J. Shepard, president, chairman and chief executive officer of Aegon USA, was named president and chief executive officer of the combined Aegon USA/Transamerica operation.
He is to have responsibility for all insurance operations in the Americas.
Frank C. Herringer, Transamerica's CEO, was named chairman of the board of the combined operations and to Aegon's executive board. He will oversee activities in Asia and the noninsurance operations of Transamerica, Aegon said.
Transamerica has said Herringer, 56, will get $145.8 million in vested Transamerica stock options and more than $35 million in other incentive payments as a result of the merger.
Pub Date: 7/22/99