Assicurazioni Generali will take a 38% stake in Russian insurer Ingosstrakh

Mergers & Acquisitions January 8, 2013, 7:16 am

Generali to Buy Stake in Joint Venture for $3.3 Billion

By MARK SCOTT

LONDON – The biggest Italian insurer, Assicurazioni Generali, agreed on Tuesday to buy the remaining stake in an East European joint venture that it did not already own, as part of a strategy to expand in faster-growing emerging European markets.

Under the terms of the deal reached with the European private equity firm PPF Group, Generali will pay 2.5 billion euros ($3.3 billion) to acquire a 49 percent holding in GPH, a joint venture formed in 2007.

The deal will take place in two stages. Generali will buy a 25 percent stake in GPH for 1.29 billion euros by March, and acquire the remaining 24 percent at the end of 2014, according to a statement from Generali.

Despite Europe’s financial problems, many countries in Central and Eastern Europe have continued to grow, and the region now represents the fourth-largest market for Generali behind Italy, France and Germany, the company said.

“This transaction eliminates all uncertainty over our development strategy in Central and Eastern Europe,” Generali’s chief executive, Mario Greco, said in a statement.

Mr. Greco was appointed head of Generali last year after its former chief executive, Giovanni Perissinotto, was ousted because of the company’s poor share price performance. Mr. Greco, a former McKinsey consultant, has been given the task of turning around Generali’s fortunes. The deal for GPH represents his first major move in pursuit of that goal.

Shares in Generali rose 1.25 percent in afternoon trading in Milan on Tuesday.

The deal with the PPF Group also includes an asset swap, in which Generali will take control of a 38 percent stake in the Russian insurer Ingosstrakh, and the PPF Group will acquire Generali’s ownership in two private equity funds. PPF also said it would buy GPH’s insurance businesses in Russia, Ukraine, Belarus and Kazakhstan for 80 million euros.

Generali said it would finance the first phase of the GPH acquisition from the proceeds of a recently raised 30-year bond issuance.

Goldman Sachs advised Generali on the deal.

http://dealbook.nytimes.com/2013/01/08/generali-to-buy-stake-in-joint-venture-for-3-3-billion/

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