Dallas, Texas 07/27/2015 (Financialstrend) – News that Japanese insurance company Meiji Yasuda Life Insurance has struck a deal to acquire US Insurer StanCorp Financial Group, Inc. (NYSE:SFG) for $5 billion saw the stock soar by more than 47%. However, a number of law firms have lodged investigations into the deal over allegations that certain fiduciary obligations were not met.
Japanese Companies Push for US Market
There are sentiments that StanCorp Financial Group, Inc. (NYSE:SFG) could be more valuable than the $5billion agreed between the two companies. The deal if approved by shareholders will be the largest overseas acquisition by a Japanese company. Meiji Yasuda follows in the footsteps of its peer Dai-ichi Life insurance that has already tapped into the US market with the acquisition of Protective Life Insurance Co for $5.6 billion early in the year.
Japanese companies have been forced to seek growth opportunities abroad as the addressable market back at home continues to shrink as the Yen continues to struggle against the dollar. Japanese companies are also under pressure back at home to demonstrate corporate governance in a push to return more equity to Shareholders. Meiji Yasuda hopes to generate at least 9% of its total profit from overseas insurance operation on completing the StanCorp Financial Group, Inc. (NYSE:SFG) acquisition.
Terms of The Deal
Meiji Yasuda plans to finance the deal with cash and cash equivalents having reiterated that the deal will lead to a substantial amount of cash premium to shareholders. The transactions should expand Meiji Yasuda areas of operations adding to its operations in China. Upon the deal being approved by shareholders and completed, StanCorp Financial Group, Inc. (NYSE:SFG) is to continue providing its products through the Standard brand.
StanCorp Financial Group, Inc. (NYSE:SFG)’s Chairman President and CEO are to continue leading the business as part of the agreement. StanCorp has also been given 25 days to solicit competing bids, which if another deal is endorsed, Meiji Yasuda is to receive a termination fee of about $180 million. Meiji Yasuda hopes to complete the deal at the end of March 2016.