Swiss Re AG jumped after people familiar with the matter said Japan’s SoftBank Group Corp. is edging closer to buying a quarter of the company, valuing the reinsurer at as much as 37 billion francs ($39 billion).
Billionaire Masayoshi Son could buttress the finances of his diverse SoftBank empire with steady cashflows from reinsurance through the acquisition. The Tokyo-based group has raised $93 billion out of a planned $100 billion for the world’s biggest private equity pool, while taking stakes in businesses including ride-hailing, chipmaking and office sharing.
SoftBank is holding talks to buy the stake at about 100 Swiss francs to 105 Swiss francs a share, the people said, declining to be identified as the deliberations are confidential. At 105 francs, the deal would represent a 16% premium over Swiss Re shares’ close on Feb. 7 — before the company confirmed a Wall Street Journal report that it was in talks — and value the holding at about $9.6 billion.
Swiss Re gained as much as 3.2% in Zurich trading and was up 2.9% at 97.88 francs as of 9:08 a.m. The stock has climbed 10% in the last 12 months.
The terms of the potential deal are still fluid and may change, and the companies may fail to reach an agreement, the people said. SoftBank declined to comment. A Swiss Re representative wasn’t immediately available to comment.
“Swiss Re may offer interesting opportunities for business transformation, especially in its ailing Corporate Solutions business,” Barclays analyst Ivan Bokhmat wrote in a note to clients. “The end target is still not clear for Softbank — a minority investment will not allow it to control investment policy or growth priorities for Swiss Re.”
The insurance industry is experiencing a flurry of dealmaking as companies come on the market after a rash of natural disasters depressed valuations and an influx of competitors made it harder to raise rates. France’s Axa SA this month agreed to buy XL Group Ltd. for $15.3 billion in cash to capture a bigger slice of the U.S. property and casualty market, while American International Group Inc. in January decided to buy the Bermuda-based reinsurer Validus Holdings Ltd. for $5.56 billion in cash.
Swiss Re’s chief executive officer last month said the company would welcome a long-term investor. In a business where results can change radically from one year to the next, “it’s not a bad thing to have an anchor shareholder,” Christian Mumenthaler said at a conference in Zurich.
The reinsurer last month said it plans to raise its dividend and return an additional $1 billion to shareholders.
—With assistance from Patrick Winters.
— Read Swiss Re Completes IHC Stop-Loss Acquisition on ThinkAdvisor.