St. Paul merging with Travelers for $16 billion in stock to create commercial insurance giant
Monday, November 17th 2003, 12:00 am
By: News On 6
MINNEAPOLIS (AP) _ Travelers Property Casualty Corp. is combining with The St. Paul Companies Inc. in a $16 billion stock deal that will create one the nation's biggest business insurers, the companies announced Monday.
The new company will be known as The St. Paul Travelers Companies and is expected to have total assets of $107 billion, the companies said.
Company officials said the deal would create the nation's second largest commercial insurer behind American International Group, providing policies for commercial liability, commercial property and workers' compensation. It should also expand the companies' geographic reach.
The company will have its corporate headquarters in St. Paul, Minn. But the commercial lines of the combined company will be consolidated under the Travelers brand and will be based in Hartford, Conn.
St. Paul's chairman and chief executive, Jay S. Fishman, will be the chief executive of the combined company. Robert I. Lipp, chairman and chief executive of Travelers, will be the company's executive chairman until Jan. 1, 2006, when he is to become chairman and chief executive, the company said.
Travelers spokesman Keith Anderson said no layoffs are planned. The company, based in Hartford, was spun off from New York financial services giant Citigroup last year and employs 5,800 people in the greater Hartford area.
``When we look at our total employment base here in the Hartford area, we see that rising,'' Anderson said.
Under the terms of the proposed agreement, Travelers shareholders would receive 0.4334 shares of St. Paul stock for each share of Travelers stock. That was worth about $15.94 at Friday's closing price of $36.77 for St. Paul stock. Travelers A shares closed at $16.03 a share on Friday and its B shares closed at $16.06 a share.
Fishman said The St. Paul shareholders will receive a special dividend of $1.16 prior to the deal's closing, expected in the second quarter of 2004.
The transaction is subject to approval by shareholders and federal regulators.