Tokio Marine Holdings to Acquire Philadelphia Consolidated in $4.7 Billion Transaction
July 23 2008 - 2:30AM
PR Newswire (US)
Marks Significant Expansion by Tokio Marine into the U.S. P&C
Insurance Market TOKYO and BALA CYNWYD, Pa., July 23
/PRNewswire-FirstCall/ -- Tokio Marine Holdings, Inc. (TMHD) and
Philadelphia Consolidated Holding Corp. (Philadelphia Consolidated)
(NASDAQ:PHLY) today announced that they have entered into a
definitive agreement under which TMHD will acquire all outstanding
shares of Philadelphia Consolidated, a leading U.S. P&C
insurance company offering specialty commercial property and
casualty (P&C) products and services for targeted markets, for
$61.50 per share in cash, through TMHD's wholly owned subsidiary,
Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF). The
total transaction value is approximately U.S. $4.7 billion. The
transaction is expected to close in the fourth quarter of 2008. The
acquisition of Philadelphia Consolidated marks Tokio Marine's
significant expansion into the U.S. market and effectively
complements Tokio Marine's recent international growth initiatives.
With 47 offices and approximately 1,400 employees across the U.S.,
Philadelphia Consolidated will provide Tokio Marine with a solid
platform for their P&C business in the U.S. Philadelphia
Consolidated has a consistent record of outperforming the U.S.
P&C industry over many years, and continues to grow, even
during periods when the P&C industry is not experiencing
expansion. When combined with Tokio Marine's financial strength and
international market knowledge, Philadelphia Consolidated's proven
product development capabilities and multi-channel distribution
expertise create a unique opportunity to expand the revenue and
profits of Tokio Marine's international business. Shuzo Sumi,
President of Tokio Marine, said, "Expansion of revenue and profits
from international business is the driving force of Tokio Marine's
mid to long term growth strategy. The acquisition of Philadelphia
Consolidated is consistent with our aspirations of expanding
globally and realizing a well-balanced business portfolio. Combined
with the recently completed acquisition of Kiln, we have
established a strong presence in both key U.S. P&C and London
insurance markets. With its disciplined, highly focused marketing
and underwriting operations, Philadelphia Consolidated is an
excellent strategic fit for us. When opportunities to acquire a
premier organization arise, the best response is to act. " James J.
Maguire, Chairman of Philadelphia Consolidated, said, "I founded
this company in 1962. This is a great opportunity for us to take
the company to the next level, and as a demonstration of our
commitment, the executive management team and I will be making a
substantial investment in TMHD's stock promptly after closing of
the transaction, and I will become a member of the International
Strategic Committee of Tokio Marine." James J. Maguire, Jr., CEO of
Philadelphia Consolidated, said, "Philadelphia Consolidated's
management team is fully committed to the successful growth of the
business and delivering a performance which will continue our
superior level of achievement. Joining the Tokio Marine Group with
its international reach will fuel the next stage of our growth and
will provide numerous benefits for our customers, brokers, agents
and employees. Philadelphia Consolidated's strong distribution
relationships with brokers and agents and our local market
knowledge acquired over almost 50 years will provide Tokio Marine
with a substantial platform in its effort to realize superior
growth and profitability in the U.S. and on an international scale.
In addition, Tokio Marine's credit quality and overall financial
strength will open up additional avenues of expansion further
enabling the combined company to generate enhanced returns."
President Sumi concluded, "Tokio Marine has great respect for the
superior growth and profitability that Philadelphia Consolidated
has achieved under the leadership of its experienced and highly
capable management team. We are pleased with the commitment of
Philadelphia Consolidated's management to this new partnership,
which will be critical to the success of the combined business.
Both Philadelphia Consolidated and Tokio Marine are top-tier
insurers with a customer-driven approach, profitable underwriting,
and a focus on long-term growth. We believe that we share common
fundamental values and a business philosophy and we look forward to
a long and successful partnership." As previously announced, Tokio
Marine entered the Lloyd's market with the acquisition of Kiln in
March 2008. Philadelphia Consolidated's ability to develop highly
profitable, customized products, matched with Kiln's significant
global underwriting expertise and Tokio Marine's financial
resources, create an unsurpassed and highly complementary
international platform. The profits/losses of Philadelphia
Consolidated will be consolidated into TMHD's financial statements
from fiscal year 2009 and will deliver greater earnings consistency
throughout the insurance pricing cycle. If Philadelphia
Consolidated were included in TMHD's 2008 financial statements on a
pro forma basis, the adjusted earnings of Tokio Marine's
international business would have increased by approximately 95
percent from JPY31.7 billion (approximately $300 million) to
approximately JPY62 billion (approximately $580 million). Certain
Transaction Terms: Under the terms of the agreement, Tokio Marine
will acquire 100% of the shares of Philadelphia Consolidated in a
cash merger transaction pursuant to which each share of
Philadelphia Consolidated will be entitled to receive $61.50 per
share. The acquisition will be financed through the utilization of
Tokio Marine Group cash on hand, together with borrowings,
including non- convertible bond issuance. Approvals and Timing: The
Boards of Directors of both companies have unanimously approved the
transaction and key family shareholders representing approximately
18% of Philadelphia Consolidated's outstanding shares have agreed
to vote in favor of the transaction. The acquisition is subject to
the approval of Philadelphia Consolidated shareholders and the
approval of various regulatory authorities in Japan and the U.S.,
as well as other customary closing conditions. The transaction is
expected to close in the fourth quarter of 2008. Fox-Pitt Kelton
Cochran Caronia Waller acted as financial advisors to Tokio Marine
in this transaction and Sullivan & Cromwell LLP provided
external legal counsel. Merrill Lynch & Co. acted as financial
advisors to Philadelphia Consolidated and WolfBlock LLP. provided
external legal counsel. Enquiries: Tokio Marine Holdings, Inc.
Tokio Marine & Nichido Fire Insurance Co., Ltd. Shuji Asano,
Group Leader, Corporate Communications Dept. Tel:
+81-(0)3-5223-3212 Hayato Isogai, Chief Executive Officer Tel:
+1-212-297-6669 (Tokio Marine Americas Corporation) Fox-Pitt Kelton
Cochran Caronia Waller (Financial adviser to Tokio Marine) John
Waller Tel: +1-312-425-4077 Ian Brimecome Tel: +44-(0)20-7311-6005
Financial Dynamics (Financial PR adviser to Tokio Marine) David
Roady Tel: +1-212-850-5632 Philadelphia Consolidated Holding Corp.
Joe Barnholt, Assistant Vice President, Investor Relations Tel:
+1-610-617-7626 Merrill Lynch & Co. (Financial Advisor to
Philadelphia Consolidated) Daniel Luckshire Tel: +1-212-449-4344
Press Conference: TMHD will host a press conference held at CLUB
KANTO in the Tokyo Bankers Association Building (Tokyo Ginko Kyokai
Building) to discuss the transaction on July 23 at 04:30 P.M. Japan
time (03:30 A.M. EDT). TMHD and Philadelphia Consolidated will host
a teleconference for the international investment community today,
July 23, 2008 at 10:00 P.M. Japan time (9:00 A.M. EDT) to discuss
the announcement. The teleconference can be accessed by dialing
1-210-795-0517 (U.S. and Canada callers(*)) and entering the
passcode (*) approximately ten minutes prior to the teleconference.
An accompanying slide presentation will be available for download
on http://www.tokiomarinehd.com/en/index.html approximately at 4:30
P.M. Japan time (3:30 A.M. EDT) prior to the start of the
teleconference. (*) For dial-in numbers of countries other than
U.S. and Canada and the passcode, please contact Masamitsu Nomoto
of TMHD by e-mail to or by telephone at +81-(0)3-3285-1902. About
Tokio Marine Holdings, Inc.: Tokio Marine Holdings, Inc., the
ultimate holding company of the Tokio Marine Group, is incorporated
in Japan and is listed on both the Tokyo and Osaka Stock Exchanges.
The Tokio Marine Group operates in the property and casualty
insurance, reinsurance and life insurance sector globally with a
presence in approximately 40 countries/areas. Consolidated net
premiums written of the Group for the fiscal year 2007 was
approximately USD 21.2 billion. The Group's main operating
subsidiary, Tokio Marine & Nichido Fire (TMNF), was founded in
1879 and is the oldest and largest property and casualty insurer in
Japan. TMNF conducts business in the United States mainly through
its U.S. branch and enjoys an A.M. Best rating of A++, which ranks
among the highest in the industry. About Philadelphia Consolidated
Holding Corp.: In operation since 1962, Philadelphia Consolidated
designs, markets, and underwrites commercial property/casualty and
professional liability insurance products incorporating value added
coverages and services for select industries. The Company, whose
commercial lines insurance subsidiaries are rated A+ (Superior) by
A.M. Best Company and A1 for insurance financial strength by
Moody's Investors Services, is nationally recognized as a member of
Ward's Top 50, Forbes' Platinum 400 list of America's Best Big
Companies and Forbes' 100 Best Mid-Cap Stocks in America. The
organization has 47 offices strategically located across the United
States to provide superior service. Cautionary Statement Regarding
Forward-Looking Statements Certain statements in this release may
constitute "forward-looking statements." Actual results could
differ materially from those projected or forecast in the
forward-looking statements. The factors that could cause actual
results to differ materially include, in addition to Risk Factors
referred to in filings made with the Securities and Exchange
Commission ("SEC"), the following: operating costs, customer loss
and business disruption (including, without limitation,
difficulties in maintaining relationships with employees, customers
or suppliers) may be greater than expected following the
announcement of the transaction; the retention of certain key
employees at Philadelphia Consolidated; the conditions to the
completion of the transaction may not be satisfied, or the
regulatory approvals required for the transaction may not be
obtained on the terms expected or on the anticipated schedule; the
parties may not be able to meet expectations regarding the timing,
completion and accounting and tax treatments of the merger. Tokio
Marine and Philadelphia Consolidated assume no obligation to, and
expressly disclaim any obligation, to update the information in
this release, except as otherwise required by law. Readers are
cautioned not to place undue reliance on these forward- looking
statements that speak only as of the date hereof. Additional
Information and Where to Find it This communication may be deemed
solicitation material in respect of the proposed acquisition of
Philadelphia Consolidated by Tokio Marine. In connection with the
proposed acquisition, Philadelphia Consolidated intends to file
relevant materials with the SEC, including Philadelphia
Consolidated's proxy statement on Schedule 14A. STOCKHOLDERS OF
PHILADELPHIA CONSOLIDATED ARE URGED TO READ ALL RELEVANT DOCUMENTS
FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, INCLUDING
PHILADELPHIA CONSOLIDATED'S PROXY STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain the documents
free of charge at the SEC's web site, http://www.sec.gov/, and
Philadelphia Consolidated stockholders will receive information at
an appropriate time on how to obtain transaction-related documents
for free from Philadelphia Consolidated. Such documents are not
currently available. Participants in the Solicitation Tokio Marine
and its directors and executive officers, and Philadelphia
Consolidated and its directors and executive officers, may be
deemed to be participants in the solicitation of proxies from the
holders of Philadelphia Consolidated common stock in respect of the
proposed transaction. Information about the directors and executive
officers of Tokio Marine is set forth in its Schedule 13D filing
with the SEC with respect to Philadelphia Consolidated's shares.
Information about the directors and executive officers of
Philadelphia Consolidated is set forth in the proxy statement for
Philadelphia Consolidated's 2008 Annual Meeting of Stockholders,
which was filed with the SEC on April 15, 2008. Investors may
obtain additional information regarding the interest of such
participants by reading the proxy statement regarding the
acquisition when it becomes available. DATASOURCE: Tokio Marine
Holdings, Inc.; Philadelphia Consolidated Holding Corp. CONTACT:
Shuji Asano, Group Leader, Corporate Communications Dept.,
+81-3-5223-3212, or Hayato Isogai, Chief Executive Officer, Tokio
Marine Americas Corporation, +1-212-297-6669, both of Tokio Marine
Holdings, Inc., Tokio Marine & Nichido Fire Insurance Co.,
Ltd.; or John Waller, +1-312-425-4077, or Ian Brimecome,
+44-20-7311-6005, both of Fox-Pitt Kelton Cochran Caronia Waller
(Financial adviser to Tokio Marine); or David Roady of Financial
Dynamics (Financial PR adviser to Tokio Marine), +1-212-850-5632;
or Joe Barnholt, Assistant Vice President, Investor Relations of
Philadelphia Consolidated Holding Corp., +1-610-617-7626; or Daniel
Luckshire of Merrill Lynch & Co. (Financial Advisor to
Philadelphia Consolidated), +1-212-449-4344 Web site:
http://www.tokiomarinehd.com/en/index.html
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