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Axa to buy XL for $15.3bn

Axa to buy XL for $15.3bn

The French multinational AXA, second largest insurer in Europe, has reached an agreement this Monday for purchase of American company of insurance of property and accidents XL Group in an operation that round 15.3 billion of dollars (12.4 billion of euros).

XL's shareholders will get $57.60 per share - a 33 per cent premium to the group's share price before the deal was announced.

AXA Chief Executive Thomas Buberl said the deal will enable AXA, predominantly a life and savings insurer, to dominate the global property and casualty market.

XL has already agreed to AXA's offer, and AXA, which ranks as Europe's second-biggest insurer in terms of market capitalization behind Germany's Allianz, will look to de-list XL's shares.

Upon completion of the transaction, the combined operations of XL Group, Axa Corporate Solutions and Axa Art will be led by Greg Hendrick, now the president and chief operating officer of XL Group, who will be appointed CEO of the combined entity.

The Wall Street Journal said the acquisition of XL "marks another step in AXA's plan to cut its exposure to financial markets and focus more on insurance products that aren't sensitive to swings in interest rates and stock prices".

Buberl commented: "XL Group has the right geographical footprint, world-class teams with recognised expertise and is renowned for innovative client solutions".

"However, acquiring XL does give global commercial P&C lines exposure and further accelerate AXA's exit from more volatile business lines in the USA", it added. "The two companies share a common culture around people, risk management and innovation, positioning AXA uniquely for the evolving future of the P&C industry".

"With every confidence in how we have positioned XL Group for the future, it is a substantial testament to Axa's leadership and commitment to maintaining the XL Group brand and culture that we have come to an alignment", McGavick added.

Insurers around the world have started to strike up takeover deals in order to strengthen their businesses as they face tougher regulation and falling returns based on financial markets investments.

The strong complementarities between AXA and XL Group provides opportunities for significant value creation, offsetting the planned US IPO earnings dilution as soon as 2018.

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