AXA In Deal To Buy XL Group For $15.3 Bln; Stock Dips

(RTTNews) - Shares of Axa SA (AXAHY.PK) were losing around 8 percent in the early morning trading in Paris after the French insurer on Monday announced its agreement to acquire XL Group Ltd (XL), a US-based Property & Casualty commercial lines insurer and reinsurer. The total consideration for the deal is $15.3 billion or 12.4 billion euros in cash.

XL shares were gaining around 29 percent in the pre-market activity on the NYSE at $56.

AXA also reaffirmed its Ambition 2020 targets noting that the strong complementarities between the companies provide opportunities for significant value creation, offsetting the planned US IPO earnings dilution as soon as 2018. The company expects the deal to be cash accretive with more than 80% remittance ratio from XL Group.

Axa added that the deal has led it to review its exit strategy from its existing US operations which the company now expects to accelerate.

As per the terms of the transaction, XL Group shareholders will receive $57.60 per share. This represents a premium of 33% to XL Group closing share price on March 2, 2018.

The boards of both AXA and XL Group unanimously approved the merger agreement. Completion of the deal is expected to take place during the second half of 2018, subject to approval by XL Group shareholders and other customary closing conditions.

The deal would be financed by about 3.5 billion euros of cash at hand, about 6 billion euros from the planned US IPO and related transactions, and about 3 billion euros of subordinated debt.

Upon completion of the transaction, the combined operations of XL Group, AXA Corporate Solutions and AXA Art will be led by Greg Hendrick, currently the President and Chief Operating Officer of XL Group. He will be appointed CEO of the combined entity and join AXA Group's management committee, reporting to Thomas Buberl, AXA Group CEO.

Following the closing, Mike McGavick, XL Group's current CEO, will become Vice-Chairman of the combined P&C Commercial lines operations and special adviser to Buberl to advise on integration-related and other strategic matters.

Commenting on the deal, Buberl said, "Our combined P&C Commercial lines operations, will have a strong position in the large and upper mid-market space, including in specialty lines and reinsurance, and will complement and further enhance AXA's already strong presence in the SME segment. The two companies share a common culture around people, risk management and innovation, positioning AXA uniquely for the evolving future of the P&C industry."

In Paris, Axa shares were trading at 23.18 euros, down 7.47 percent.