On Jun 3, 2014, shares of Protective Life Corp. ( PL ) climbed up to touch a 52-week high of $60.38. The movement in the share price was propelled by the news that Japan's Dai-ichi Life Co. would buy Protective Life to foray into U.S. life insurance market. Meanwhile, the stock has been performing strongly which is reflected in its share price that has moved up 18.1% year to date.
Dai-ichi will be shelling out $5.7 billion or $70.00 per share which translates into a premium of 19% on the basis of share price of $58.72 at the close of trading on Jun 3.
While Protective will retain its operational and management setup post acquisition, the buyout will provide immense diversification benefits, helping it to transform from a national to an international player courtesy of being a wholly owned subsidiary of the Japanese insurer. Dai-ichi Life enjoys an active market presence in other parts of the globe. Other support in terms of capital, management expertise and expanded distribution facility will be part of the parcel.
The acquisition will likely close by the end of this year or early next year.
Protective Life would nicely complement Dai-ichi as the company scores strongly on a number of aspects such as robust operating performance, strong and a diversified business profile, sound capital structure as well as a disciplined capital management strategy which has managed to generate substantial returns for investors.
During the latest reported quarter, Protective Life surprised positively by outpacing on both top line as well as bottom line. The insurer's operating earnings of $1.19 per share came in 4 cents ahead of the Zacks Consensus Estimate, and surged 34% on a year-over-year basis, backed by favorable performance by its Annuity and Stable Value lines. Total revenue of $1.1 billion scaled up 16.9% year over year on higher net premium and net investment income.
Protective Life carries a Zacks Rank #2 (Buy). Other stocks such as Symetra Financial Corporation ( SYA ) with a Zacks Rank #1 (Strong Buy) or Lincoln National Corporation ( LNC ) and Sun Life Financial Inc. ( SLF ), with the same rank as Protective Life are worth considering.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.