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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Manulife Financial Corporation    MFC   CA56501R1064

MANULIFE FINANCIAL CORPORATION

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Manulife, Metlife submit bids for ING Asia sale: sources

05/19/2012 | 01:34am EST

HONG KONG (Reuters) - Manulife Financial Corp (>> Manulife Financial) and Metlife (>> Metlife Inc) are among the companies that have submitted first round bids for ING's entire Asia life insurance business, sources said on Saturday, in what could be the largest Asia M&A insurance deal ever.

HONG KONG (Reuters) - Manulife Financial Corp (>> Manulife Financial) and Metlife (>> Metlife Inc) are among the companies that have submitted first round bids for ING's entire Asia life insurance business, sources said on Saturday, in what could be the largest Asia M&A insurance deal ever.

ING's long awaited sale of Asian life insurance and the asset management units will help the Dutch bancassurer to partly repay the 3 billion euros ($3.81 billion) of state aid plus the 50 percent premium it still owes the Dutch government.

The bids were submitted late on Friday and the indicative offers ranged between 6-7 billion euros ($7.6-$8.9 billion), according to one source with knowledge of the matter. Of the eight to 10 companies that sent offers, a shortlist will emerge by the end of May, the source said, adding that five bidders expressed interest for the whole Asia division while the rest sought parts of the business.

Still, some suitors have developed cold feet, as demonstrated by Samsung Life Insurance's (>> Samsung Life Insurance co., Ltd) decision on Thursday to pull out of the race at the last minute. South Korea's Kyobo Life has also dropped out, and it was also unclear whether Prudential Financial Corp (>> Prudential Financial Inc) took part in the first round.

Prudential Financial was seen as one of the strongest contenders to buy the whole Asian unit, and its absence from the process could be a setback to competitive dynamics of the auction, sources said.

A sale topping $7 billion would rank as Asia's top insurance M&A deal and add to a flurry of financial institutions deals being launched in Asia this year.

After receiving a government bailout in 2008, ING has sold 15.2 billion euros worth of assets across the world. The Asian sales would figure among the top two deals from ING's stable.

Asian insurer AIA Group Ltd (>> AIA Group Ltd) and Korea's KB Financial Group (>> KB Financial Group Inc) also submitted first round bids, sources said. Korea Life Insurance Co (>> KOREA LIFE INSURANCE), Canada's Sun Life Financial Inc (>> Sun Life Financial), and Switzerland's Zurich Insurance Group (>> Zurich Financial Services), were also expected to submit offers.

U.S. private equity fund J.C. Flowers & Co, TPG <TPG.UL> and Carlyle Group are among the buyout shops that have expressed interest, though they are expected to team up with a bidder to buy the Japanese business rather than bid on their own, sources said.

The sources declined to be identified because details of the auction process remain confidential. ING declined to comment.

Companies mentioned in this report either could not be reached for comment, or declined to comment.

As part of the Asian divestment, ING received about 10 initial bids for its Asian asset management business this week. The asset management business, expected to fetch between $500 million and $600 million, is being sold separately.

ING had sent out more than a dozen information memorandums for its insurance business, which spans southeast Asia and includes operations in Japan and South Korea. A winning bid by a larger insurer could introduce more competition into Asia's rapidly growing life insurance market, currently dominated by AIA Group Ltd (>> AIA Group Ltd) and British insurer Prudential plc (>> Prudential plc).

RARE ASSET

ING's Asian operations offer a platform for insurers keen to expand their Asian footprint and tap into the region's rapid premium growth. Life insurance premiums in emerging Asia are forecast to grow at 9.5 percent this year and 8.7 percent next year, nearly three times the world average, according to Swiss Re estimates.

"This is a once-in-a-lifetime opportunity which many CEOs will find hard to let go," said one banker who is advising a potential buyer.

ING CEO Jan Hommen said last week that the Asian divestments would probably fetch less than 8 billion euros ($10.2 billion).

A deal would need to surpass $7.06 billion to become Asia's biggest insurance deal and overtake Australian fund manager AMP's (>> AMP Limited) 2011 purchase of AXA's Australian unit, Thomson Reuters data shows.

Most buyers are likely to place aggressive bids in the first round in order to advance to the second round. But the deal has its own challenges and not all bidders are keen to lay their hands on the entire Asian pie.

Potential buyers are most wary of ING's Japan insurance business due to uncertainty over liabilities arising from variable annuity products on its books there.

ING's Southeast Asian operations are the most sought after, sources said. ING has indicated that it prefers bids for the whole Asian business, though it is allowing offers for three geographic regions: Southeast Asia, South Korea and Japan.

ING has prohibited bidders from forming consortiums in the first round though those who move into the second round could join hands and break up the asset.

ING's decision to invite bids for geographic portions as well as its entire Asia operations is designed to enhance bid competition and maximise sale value, sources said.

ING plans to hold management presentations for the shortlisted bidder by mid-June sources added.

The sources were not authorized to speak to the media.

All companies mentioned in this report either declined to comment or could not be reached for comment.

BANKERS' PAY DAY

ING operates across seven Asian centres. Profits from its Asia-Pacific insurance operations rose 39 percent in the first quarter of 2012 from a year ago to 218 million euros ($282.2 million), according to the latest company filings.

South Korea and Japan accounted for 77 percent of the profits while Malaysia accounted for 10 percent. Japan accounted for about 45 percent of Asia-Pacific's underlying profit before tax, followed by South Korea and Malaysia.

For investment banks starved of IPOs and M&A deals, ING's Asian divestment could provide a much needed boost. Bankers and lawyers stand to earn about $100 million in fees if the deal is completed, some sources said.

By winning the sell-side mandate, Goldman Sachs (>> Goldman Sachs Group, Inc.) and J.P. Morgan (>> JPMorgan Chase & Co.) are best-placed to earn a slice of the fee pool. Their final payout will hinge on the structure of the deal and the final price among other factors.

Freeman & Co estimates banks could make $60 million to $70 million in advisory fees, excluding financing, hedging and other revenue streams. The calculation does not include lawyers' fees.

The M&A advisory fees will be the most significant but there could be additional money made on forex and interest hedging given the cross-border nature of the transaction.

($1 = 0.7869 euros)

(Additional reporting by Clare Baldwin and Miyoung Kim; Editing by Mark Bendeich, Michael Flaherty and Daniel Magnowski)

By Denny Thomas


© Reuters 2012
Stocks mentioned in the article
ChangeLast1st jan.
AIA GROUP LIMITED 3.67% 104.4 End-of-day quote.9.89%
AMERICAN INTERNATIONAL GROUP INC -0.29% 41.23 Delayed Quote.9.09%
AMP LIMITED -0.95% 1.565 End-of-day quote.0.32%
ASSICURAZIONI GENERALI S.P.A. -0.24% 14.365 Delayed Quote.0.98%
BEST INC. -1.67% 2.055 Delayed Quote.2.45%
FIRST FINANCIAL CORPORATION -1.77% 41.04 Delayed Quote.7.54%
HANWHA LIFE INSURANCE CO., LTD. -3.15% 3070 End-of-day quote.25.82%
ING GROEP N.V. -0.13% 7.846 Real-time Quote.2.81%
KB FINANCIAL GROUP INC. -2.90% 45200 End-of-day quote.4.15%
MANULIFE FINANCIAL CORPORATION -1.47% 24.185 Delayed Quote.7.46%
METLIFE, INC. -1.26% 50.96 Delayed Quote.9.84%
PRUDENTIAL FINANCIAL, INC. -1.18% 82.985 Delayed Quote.7.48%
PRUDENTIAL PLC -0.10% 1430.5 Delayed Quote.6.31%
SAMSUNG LIFE INSURANCE CO., LTD. -2.71% 82600 End-of-day quote.4.42%
SUN LIFE FINANCIAL INC. 0.18% 59.72 Delayed Quote.5.28%
TEAM, INC. -6.85% 11.02 Delayed Quote.8.53%
THE GOLDMAN SACHS GROUP, INC. -2.25% 301.05 Delayed Quote.14.88%
ZURICH INSURANCE GROUP LTD -0.82% 375.1 Delayed Quote.1.26%
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Financials
Sales 2020 73 485 M 57 580 M 57 580 M
Net income 2020 5 256 M 4 119 M 4 119 M
Net cash 2020 27 509 M 21 555 M 21 555 M
P/E ratio 2020 8,99x
Yield 2020 4,27%
Capitalization 47 633 M 37 677 M 37 323 M
EV / Sales 2020 0,27x
EV / Sales 2021 0,28x
Nbr of Employees 35 000
Free-Float 100,0%
Chart MANULIFE FINANCIAL CORPORATION
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Manulife Financial Corporation Technical Analysis Chart | MFC | CA56501R1064 | MarketScreener
Technical analysis trends MANULIFE FINANCIAL CORPORATION
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TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 25,13 CAD
Last Close Price 24,55 CAD
Spread / Highest target 14,1%
Spread / Average Target 2,38%
Spread / Lowest Target -10,4%
EPS Revisions
Managers and Directors
NameTitle
Roy Gori President, Chief Executive Officer & Director
John M. Cassaday Chairman
Rahul M. Joshi Chief Operations Officer
Philip Witherington Chief Financial Officer
Shamus Edward Weiland Chief Information Officer
Sector and Competitors
1st jan.Capitalization (M$)
MANULIFE FINANCIAL CORPORATION7.46%37 677
AXA2.73%58 194
PRUDENTIAL PLC6.31%50 960
METLIFE, INC.9.84%46 410
PRUDENTIAL FINANCIAL, INC.7.48%33 178
AFLAC INCORPORATED5.40%32 924