AMSTERDAM, Netherlands (AP) -- Dutch insurer Aegon NV is buying the U.S. life insurance company Transamerica Corp. for $9.7 billion in cash and stock.
Aegon said the deal announced Thursday would make it the third largest U.S. life insurer.The corporate and insurance operations of San Francisco-based Transamerica will merge with Aegon's businesses in the United States when the deal is completed this summer, the Dutch company announced.
Aegon's U.S. arm includes the operations of the Providian Corp. which it bought in 1996 in a deal valued at $3.5 billion.
The Transamerica deal will make Aegon the third largest life insurer in the United States in terms of assets and premium written, the company said.
Aegon will assume about $1.1 billion of Transamerica's holding company debt as part of the deal.
Aegon Chairman Kees Storm said in a statement that he is confident the integration of the U.S. group will go smoothly. "Aegon has a proven track record of successfully integrating companies and people," Storm said.
Transamerica Chairman Frank Herringer called the deal a "well-considered strategic move."
Henk Brouwer, an analyst with the National Investeringsbank in Amsterdam, agreed. "It's a very good deal," he said. "Aegon will get access into countries such as Canada where it wasn't active before and it will be able to achieve a higher autonomous growth."
Shares of Transamerica shot up $16, or 28 percent, to $73.62 1/2 on the New York Stock Exchange. Aegon's shares surged 5.6 percent on the Amsterdam Stock Exchange.
Aegon said it was offering a premium of 35 percent over Transamerica's closing price Wednesday of $57.62 1/2 a share. The payment of $9.7 billion will be made 70 percent in stock and 30 percent in cash.
Aegon said the deal should boost earnings per share this year and boost next year's boost per-share earnings by at least 3 percent.
Aegon said earnings per share in 1999 should rise by between 12-15 percent from 1998.