Nationale Suisse Shares Soar as Helvetia Wins Bidding Contest

Jul 07, 2014 8:54 am ET

July 7 (Bloomberg) -- Nationale Suisse shares soared to the highest in almost 25 years after Helvetia Holding AG won a bidding contest to buy the company, valuing it at about 1.8 billion Swiss francs ($2 billion) and creating Switzerland’s third-biggest insurer.

Nationale Suisse, which said it was pushed into a takeover by its largest shareholders, rose 25 percent to 79.20 francs at 2:30 p.m. in Zurich trading, the most since December 1989. Helvetia shares dropped 0.3 percent.

The new combined group, which will have about 9.1 billion Swiss francs in premiums, will allow Helvetia to supplant Baloise Holding AG as Switzerland’s third-largest insurer. The transaction could result in higher profits and dividends for shareholders, St. Gallen, Switzerland-based Helvetia said at a news conference in Zurich today.

“The combination of the two insurance groups is the natural fit, but the price paid appears on the high side,” Stefan Schuermann, a Zurich-based analyst with Vontobel Holding AG, wrote in a note to investors. “We expect the deal to go through and prosper under the strong Helvetia brand name.”

Helvetia is offering 80 francs in cash and shares for Nationale Suisse, 26 percent more than the July 4 closing price. Helvetia currently owns 18.7 percent of Nationale Suisse’s shares.

Nationale Suisse received “several” takeover bids before accepting the higher Helvetia offer, Nationale Suisse Chairman Andreas Von Planta told journalists. He declined to identify the other bidders.

‘Negative Effects’

The company agreed to a transaction after its three main shareholders, Helvetia, Baloise and Mobiliar, increased their stakes, creating speculation of a takeover that affected employees and customers, Chief Executive Officer Hans Kuenzle said.

“The supervisory and executive boards were for a long time convinced that Nationale Suisse has an independent future,” Von Planta said. “The shareholder structure with three dominating core shareholders had increasingly negative effects.”

Baloise, which holds a 10 percent stake in Nationale Suisse, will examine Helvetia’s offer, according to Dominik Mueller, a company spokesman. Mobiliar, which has 19 percent of the shares, said it will also analyze the offer and comment later.

With the takeover, Helvetia will strengthen its market position in Switzerland, while expanding its general insurance business and boost existing European markets including Germany, according to a presentation on its website. The takeover will also increase premiums at the company’s specialty lines unit, selling products such as art insurance, by 60 percent to 1 billion francs.

Baloise, which will now become Switzlerand’s fourth largest insurer after Zurich Insurance Group AG, Swiss Life Holding AG and Helvetia, said it sees no negative affect from the merger.

“We have a clear strategy and a good competitive position,” Mueller said in an e-mail. “We have a strong market presence and don’t expect a disadvantage from the merger.”