A multiline mutual insurer has announced plans to reacquire all of the stock of a financial services affiliate that has been publicly traded since March 1997.
Nationwide Mutual Insurance Company, Columbus, Ohio, has sent shareholders of the affiliate, Nationwide Financial Services Inc., Columbus, an offer to buy their stock in Nationwide Financial for about $2.2 billion cash, or $47.20 per Class A common share.
The price is about 16% higher than the March 4 closing price, Nationwide Mutual says.
Nationwide Mutual and its affiliates now own 66% of the equity and 95% of the voting power of Nationwide Financial, Nationwide Mutual estimates.
The offer "provides the public stockholders of NFS with immediate liquidity and certain value in an uncertain market," Fred Finney, a Nationwide Mutual board member, writes in a letter filed with the U.S. Securities and Exchange Commission.
Nationwide Mutual and Nationwide Financial should work better together if they are back under common ownership, Finney says.
Nationwide Mutual wants to acquire Nationwide Financial by merging Nationwide Financial into a newly created corporation.
Once the deal was completed, Nationwide Financial common stock would no longer trade on the New York Stock Exchange, Finney writes.
Nationwide Financial has formed a special committee to evaluate the proposal, and Nationwide Mutual says it expected the formation of the committee, Finney writes.
The deal still must be approved by the special committee and the boards of Nationwide Mutual and two Nationwide Mutual affiliates, Nationwide Mutual Fire Insurance Company and Nationwide Corp., Finney writes.
Finney notes that Nationwide Mutual reserves the right to walk away from the deal until the companies approve a definitive merger agreement.
Analysts in the Chicago office of Fitch Ratings say they want to think about the proposal before making any changes to the ratings of Nationwide Mutual and its affiliates.
