TOKYO: Tokio Marine Holdings Inc. shares rose after analysts said the insurer’s plan to buy HCC Insurance Holdings Inc. will be positive for the Japanese company.
The shares climbed as much as 2.4 percent before trimming gains to 0.2 percent to trade at 4,915 yen at 10:23 a.m. local time Thursday. The benchmark Topix index added 1.3 percent.
“We view the deal positively given the cash funding, the quality of the company purchased, and the incredible impact of Tokio Marine’s earnings and ROE,” Jefferies analysts Makarim Salman and Ken Oiwa said in a report.
Tokio Marine on Wednesday agreed to buy HCC for about $7.5 billion in the biggest acquisition by a Japanese insurer. It will pay $78 in cash per share for Houston, Texas-based HCC. That’s a 37.6 percent premium to the latest closing price before the deal was announced.
Before the latest deal, Tokio Marine had made $8.8 billion of purchases in North America, including the 2008 acquisition of Philadelphia Consolidated Holding Corp., valued at $4.6 billion, and Delphi Financial Group Inc. in 2011.
“We see synergies with Philadelphia and Delphi over time,” the Jefferies analysts wrote.
The acquisition will accelerate Tokio Marine’s business growth overseas, Nomura Holdings Inc. analyst Wataru Ohtsuka wrote in a report.
