Life insurer Principal Financial Group Inc. (PFG), Monday said it has agreed to acquire Chile-based pension company AFP Cuprum S.A in a deal worth $1.5 billion. The move would enable Principal Financial to expand its presence in the growing Latin American country.
Luis Valdes, president and chief executive officer of Principal International, said, "The acquisition of Cuprum, combined with Principal International's current success in the Chilean annuity, mutual fund and voluntary pension markets, will generate accelerated growth because of our ability to now offer customers in Chile an unmatched line-up of pension savings and retirement income solutions - from hire through retire."
The deal provides Empresas Penta S.A. and Inversiones Banpenta Limitada will sell their 63 percent ownership in Cuprum and would also include the remaining 37 percent publicly traded shares through a public tender offer.
Des Moines, Iowa-based Principal Financial Group expects the acquisition to close in first quarter of 2013 and be immediately accretive to its earnings thereafter. The deal requires regulatory approval from Chilean authorities and closing of other customary conditions to consummate.
Chilean pension manager Cuprum has about $32.1 billion of assets under management. Cuprum provides pension products that includes mandatory employee-funded pension plans, voluntary pension products, and other long-term savings products.
Principal Financial Group's CEO Larry Zimpleman said, "This acquisition continues our effort to find targeted, strategic acquisitions that strengthen our competitive position in the most attractive emerging retirement and long-term savings markets. Cuprum represents the sixth such transaction in the past two years and adds meaningfully to our fee-based earnings, giving us continued financial flexibility."
PFG closed Monday's trading at $27.77, up $0.01 or 0.04%, on a volume of 0.9 million shares, on the NYSE.
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