In what is being seen as a continuation of consolidation in the insurance sector it was reported today that Ace is acquiring The Chubb Corp in a cash and stock deal valued at $28.3 billion that many believe would boost its international presence. According to the details of the deal, shareholders of Chubb would receive $62.93 per share in cash and 0.6019 shares of Ace Ltd stock. The price is a 30 percent premium over Chubb’s closing price on Tuesday. Shares of Chubb were one of the biggest gainers in early morning trade today jumping by close to 35 percent on the back of heavy volumes which is being seen as a bullish sign. Shareholders of Ace Ltd would own 70 percent of the combined business and the rest would be owned by Chubb shareholders.
The combined company intends to use the Chubb name and would have its main offices in Zurich, Switzerland where Ace is based. Ace Chairman and CEO would serve in those roles for the combined company. Chubb President will serve as executive Vice-chairman for external affairs of North America. Many analysts believe that the acquisition would immediately add to the earnings per share of the company as there would be savings of close to $650 million. The board of directors of both companies have unanimously approved the transaction which is targeted to be closed by the first quarter of 2016 post regulatory and shareholder approvals.
Shares of Ace rose by close to 11 percent during the early morning trading session today and have given a buy signal on the charts which is indicative of the strong buying interest present at current levels. Analysts on the street are quiet positive about the deal and believe that the decision is one in the right direction for the company.