HOUSTON, Feb. 25 /PRNewswire/ -- American General Corporation (NYSE: AGC)
today completed the previously announced acquisition of the remaining 54% of
Western National Corporation for $1.2 billion. The transaction was
consummated following today's approval by Western National shareholders.
Western National, with assets of $12 billion and shareholders' equity of
$1.1 billion, is the nation's leading provider of fixed annuities marketed
through financial institutions. This transaction marks American General's
third acquisition during the past 12 months for total consideration of
$3.7 billion.
In a related action, Western National will be incorporated into American
General's retirement services division, which also includes the company's
existing retirement services company, VALIC. The expanded retirement services
division will benefit from the elimination of certain redundant activities
through combining common administrative and systems functions for the two
companies, resulting in $15 million of operating efficiencies.
The division has formed an office of the chairman, with Thomas L. West,
Jr. as chairman and chief executive officer, John A. Graf as president, and
Craig R. Rodby as vice chairman and chief financial officer. West and Rodby
previously held similar positions with VALIC. Graf previously served as vice
chairman and chief marketing officer of Western National.
In commenting on the transaction, Robert M. Devlin, chairman and chief
executive officer of American General, said, "With the completion of the
Western National acquisition, American General opens a new and exciting
chapter in our retirement services operations. This transaction expands our
presence in one of the fastest-growing markets of the financial services
industry. Now, American General will derive over one-third of its annual
operating earnings from this dynamic growth market. Also, on a pro forma
basis, American General is the nation's third-largest writer of individual
annuities with 1997 annuity sales of over $5 billion.
"By combining these two great companies into one division, we will be able
to expand on the success and momentum each company has achieved in its
respective markets. Western National's expertise in the non-qualified market
complements our existing leadership position in the qualified market. The
benefits of this divisional structure will include expanded distribution, new
product offerings, operating efficiencies, and enhanced financial strength and
flexibility. Under the leadership of Tom, John, and Craig, American General's
retirement services division will reach an expanded customer base through
innovative products designed to meet customers' growing retirement planning
needs."
Before the previously announced deadline of February 23, Western National
shareholders could elect to exchange each of their Western National shares for
$30.8951 in cash or 0.5413 share of American General common stock, with each
limited to 50% of the aggregate consideration. The preliminary results of the
cash and stock elections were as follows: approximately 5.6 million shares
(including 1.6 million shares guaranteed for delivery), or 14.9%, tendered for
cash; and approximately 31.2 million shares (including 10.6 million shares
guaranteed for delivery), or 83.2%, tendered for common stock. The remaining
shares represent non-electing shares.
As a result, all Western National shareholders who elected cash, and those
who made no election, will receive $30.8951 in cash for each Western National
share. Western National shareholders who made stock elections will be subject
to pro-ration of approximately 60% American General common stock and 40% cash
for each of their Western National shares, assuming timely delivery of the
guaranteed shares. In completing the transaction, American General paid
$580 million in cash (50%) and issued 10.2 million shares of American General
common stock (50%). The acquisition is being accounted for on a purchase
basis. Of the shares represented at the meeting, 99.9% voted in favor of the
transaction, representing 78.5% of the total outstanding shares.
American General Corporation is one of the nation's largest diversified
financial services organizations with assets of $93 billion and shareholders'
equity of $8.2 billion. Headquartered in Houston, it is a leading provider of
retirement services, life insurance, and consumer loans to 12 million
customers. American General common stock is listed on the New York, Pacific,
London, and Swiss stock exchanges.
SOURCE American General Corporation
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