Largest Dutch insurer NN Group to buy smaller rival Delta Lloyd for $2.7 bn

NN Group, the Netherlands largest insurer by market capitalization, today offered to buy its smaller rival Delta Lloyd for €2.4 billion ($2.7 billion) in cash.

NN Group is offering to pay €5.30 per share, a 29-per cent premium over Delta Lloyd's  closing €4.12 price on Tuesday, and 53-per cent higher than its three-month average.

NN Group intends to finance the deal using existing cash resources and external debt.

The deal will create a well-diversified leader in the Dutch pensions, life and non-life insurance and banking sectors, with a strong asset management platform, attractive international presence, and growth opportunities.

The Hague-based insurer said that it expects the transaction to be EPS, free cash flow and DPS accretive. NN Group will complete the previously announced €500 million share buybacks, but the remaining outstanding part of the share buyback will be suspended in light of the proposed acquisition.

Lard Friese, CEO of NN Group, said, ''We believe there is a clear and compelling logic to bring consolidation to the Dutch insurance market through a combination of the businesses of NN Group and Delta Lloyd in a way that benefits both companies and their stakeholders.''

''The combination will be a leading player in the Dutch insurance, banking and asset management markets, with a strong international presence, which will benefit from economies of scale and significant free cash flow generation potential, and offer an array of attractive products and services to customers,'' he added.