NEW YORK (TheStreet) -- Shares of Symetra Financial Corp. (SYA) are gaining by 6.71% to $31.50 in pre-market trading on Tuesday morning, after it was announced that the financial services company will be acquired by Japan's Sumitomo Life Insurance Co. for $3.8 billion.
Sumitomo will purchase all outstanding shares of Symetra and shareholders will receive $32 per share in cash at the closing.
"This transaction will bring compelling strategic and financial benefits for Symetra, including providing a substantial cash premium to our shareholders. Our vision and long-term plans for building Symetra into a national player are unchanged. We will be positioned better than ever to successfully execute on these plans," Symetra CEO Thomas Marra said in a statement.
The transaction has been unanimously approved by Symetra's board of directors but is still subject to approval by the company's shareholders.
The deal is expected to close late in the fiscal 2016 first quarter.
Separately, TheStreet Ratings team rates SYMETRA FINANCIAL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SYMETRA FINANCIAL CORP (SYA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Although SYA's debt-to-equity ratio of 0.22 is very low, it is currently higher than that of the industry average.
- Despite the weak revenue results, SYA has outperformed against the industry average of 14.0%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- SYMETRA FINANCIAL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SYMETRA FINANCIAL CORP increased its bottom line by earning $2.19 versus $1.75 in the prior year. For the next year, the market is expecting a contraction of 20.1% in earnings ($1.75 versus $2.19).
- You can view the full analysis from the report here: SYA Ratings Report