Dai-ichi said it would pay $70 per Protective share, a 34% premium to the stock's May 30 close, just before news of a pending deal leaked. The price is 19.2% higher than the stock's Tuesday close of $58.72.
News of the deal first emerged over the weekend, sparking Dai-ichi confirm its interest in U.S. life insurance targets on Monday. The deal will create the world's 13th largest insurer, with assets of $424 billion, Dai-ichi said, and give the Japanese company its first foothold in the U.S. life market.
"We look forward to working with Protective's management and employees, who will play an integral part in the long-term, continued success of the combined company, to grow our business and build on Protective's commitments to its customers, distributors and the communities in which it operates," said Dai-ichi Life President Koichiro Watanabe in a statement.
Dai-ichi said it will make no changes to Protective's management. John Johns will remain president and CEO of the target.
NYSE-listed Protective Life, founded in 1907, last month posted $96.5 million in operating earnings in the first quarter of 2014, up 34% over a year ago. It has assets of $68.8 billion.
Acquisitive Protective has crafted itself through a series of deals over the past 40 years, mainly of smaller insurers and policies. Last year it agreed to buy a portfolio of old policies from French insurer AXA's U.S.-based MonyLife Insurance Co. for $1.1 billion.
The Alabama company said in May that integration of that acquisition was on track, and that the purchase had contributed $25.7 million of operating income in the first quarter.
Dai-ichi shares closed 3.6%, or ¥52, higher in Tokyo at ¥1,499 ($14.60), giving the company a market value of ¥1.5 trillion. Investors are likely pleased the company said it would fund the deal from existing cash since on Monday it had appeared to obliquely confirm that a a ¥200 billion share sale was in the cards. Still, it said it may turn to "supplementary sources if necessary".
A Goldman Sachs (GS) teame including Celeste Guth is acting as financial adviser to Dai-ichi with Baker & McKenzie LLP's Jiro Toyokawa and Craig Roeder and a Willkie Farr & Gallagher LLP team including Alex Dye, Don Henderson, Scott Avitabile, Chris Petito and Leah Campbell providing counsel.
A Morgan Stanley (MS) team including Michael Hovey and Jim Head is financial adviser to Protective. A Debevoise & Plimpton LLP team of Nicholas Potter, Jeffrey Rosen, Lawrence Cagney, Marilyn Lion and Peter Schuur is providing legal advice.