Dai-ichi a Japanese life insurance company has come to terms to buy Protective Life (NYSE: PL) for $5.7 billion. If deal is completed, it will be the biggest purchase by any Japanese insurer. Da-ichi is looking to other areas to generate revenue due to the weak insurance market in Japan.
The Japanese insurer has always looked for other emerging markets on the global scale. Dai-ichi is the second largest life insurance company in Japan which means that they have a lot of money to leverage in efforts to expand. Dai-ichi Life said on numerous occasions that they will put up $2.4 billion in new shares to help the financing part of the deal with Protective Life.
The Japanese insurer felt like they had to look at other markets in order to survive as a successful company. The life insurance market in Japan is dealing with bearish trends due to the low interest by the aging population.
If this deal is made then Dai-ichi Life will pay $70 per share in order to buy Protective Life as a whole. The $70 per share price is 35% higher than its current price. In a statement given by Dai-ichi yesterday afternoon, in which they mentioned that this deal will be the platform for the company to compete with others in the United States market. Dai-ichi is already known in the Australian market buying out Tower Australian Group for $1.2 billion in 2010. In Tuesday’s statement they also said that this deal is expected to close by late December of this year or early January of 2015