MetLife to Acquire BBVA's Chilean Pension Business for Approximately $2 Billion

04 Feb, 2013

Skadden is advising MetLife, Inc., which has entered into a definitive agreement with BBVA to acquire AFP Provida S.A., the largest private pension fund administrator in Chile. Under the terms of the agreement, MetLife will conduct a public cash tender offer for all of the outstanding shares of Provida, and BBVA has agreed to transfer its 64.3% stake to MetLife. Assuming all publicly-held shares are tendered, the purchase price, which MetLife will fund from its existing cash balances, would be approximately $2 billion. 

 

The Skadden team includes New York partners Robert Sullivan (Insurance) and Paola Lozano (Mergers and Acquisitions), and associates Sven Mickisch (Financial Institutions) and Jaime Cubillos (Corporate).

 

In addition to the purchase price payable by MetLife in the tender offer, Provida shareholders are expected to receive from Provida, prior to the closing, dividends representing excess cash as well as the proceeds from the sale of Provida’s minority stakes in other businesses in Mexico and Peru, which are not being acquired by MetLife.

 

The acquisition of Provida aligns with MetLife’s strategic focus, which includes capitalizing on growth opportunities in emerging markets. The transaction also includes a small asset management business in Ecuador.

 

“With this acquisition, MetLife is delivering on a key component of our strategy – expanding our presence in emerging markets,” said Steven A. Kandarian, chairman, president and chief executive officer of MetLife, Inc. “MetLife is a leader in both life insurance and annuities in Chile, and Provida will further strengthen our position by adding the country’s top pension franchise. The acquisition also supports our focus on shifting our business mix to less capital intensive products. We expect it to be immediately accretive to earnings.”

 

With the acquisition of Provida, MetLife’s operating earnings from emerging markets are expected to grow from 14% today to approximately 17%. At current exchange rates on an unaudited IFRS accounting basis, net income for the businesses to be acquired, based on information publicly filed by Provida, was approximately $189 million for the 12 month period ended September 30, 2012. The transaction, which is anticipated to close in the third quarter of 2013, is expected to provide operating earnings accretion of approximately $0.05 per share in 2013 and $0.15 per share in 2014.

 

As of September 30, 2012, Provida had $45.3 billion in assets under management and 1.8 million contributors, both of which are the most in the Chilean pension industry.

 

“The assets, customers and intellectual capital this transaction brings into the MetLife family of businesses will transform our operations in Chile,” said William J. Wheeler, president, the Americas, MetLife, Inc. “We have great appreciation for the Provida franchise, and we believe their talented employees will be key to helping us reach our growth targets in the market.”

 

The tender offer described herein will be conducted in Chile and the United States and will be for all of the outstanding ordinary shares and American Depositary Shares of Provida.

 

The transaction, which is subject to receipt of certain regulatory approvals and other customary conditions, has been approved by the board of directors of MetLife.

 

BofA Merrill Lynch acted as financial advisor to MetLife. Skadden, Arps, Slate, Meagher & Flom LLP and Prieto y Cia served as legal advisors.

 

MetLife, Inc. is a leading global provider of insurance, annuities and employee benefit programs, serving 90 million customers. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.

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