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Lincoln National, Jefferson Pilot Agree To Merge

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Lincoln National Corporation announced it has agreed to purchase Jefferson-Pilot Corporation in a deal valued at about $7.5 billion.[@@]

The agreement was unanimously approved by both companies’ boards of directors.

If approved by their shareholders, both companies expect to complete the deal in the first quarter of 2006.

The combined companies would operate under the name Lincoln Financial Group, offering life insurance, annuities, and retirement and investment products and services as well as a variety of group benefits.

Based on the average stock market price for the past month, Lincoln National, Philadelphia, will pay an 11% premium for Jefferson Pilot, Greensboro, N. C.

Jefferson Pilot shareholders will receive about 1 Lincoln share or $55.96 in cash for each Jefferson Pilot share. The total cash payment to Jefferson Pilot shareholders will equal $1.8 billion, based on Lincoln Financial’s Oct. 7 closing price of $55.48 per share.

The combined company would be ranked first in the industry for universal life product sales and would be a significant presence in the life insurance market.

In group benefits the combined company would be number 8 in group disability sales, number 13 in group life sales and number 6 among publicly traded insurers in defined contribution and retirement plan assets.

Lincoln is strong not only in life insurance but also in annuities and 401(k) and 403(b) retirement plans.

Jefferson Pilot brings to the alliance considerable strength in fixed and variable universal life and fixed annuities, including equity indexed annuities, as well as group life, disability and dental insurance.

The combined company would also include Delaware Investments, Lincoln’s investment management organization; Jefferson-Pilot Communications, which owns and operates 3 television stations, 18 radio stations, and the Jefferson Pilot Sports production and syndication business; and Lincoln U.K.

The companies expect to achieve total annual cost savings of around $180 million, achieving 50% of those savings within a year of closing, 80% within 24 months and the balance by the end of 2008, according to the companies’ announcement.

Jon Boscia, chairman and chief executive officer of Lincoln, will be chairman and CEO of the combined firms, while Dennis Glass, Jefferson Pilot’s president and CEO, will be president and chief operating officer.

The merged company will maintain corporate offices in Philadelphia, while Greensboro will be the main center of operations for life insurance and Fort Wayne, Ind., will be the center for annuity operations.

The company also will maintain “significant operations” in the companies’ existing locations in Concord, N.H., and Hartford, according to the announcement. Jefferson Pilot’s group insurance will remain in Omaha, Neb.

Lincoln Financial Group has assets of $119 billion and reported revenues of $5.4 billion in 2004. Jefferson Pilot has $29.5 billion in assets and produced $4.1 billion in revenue in the same period.


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