Baker & McKenzie announced the completion of a major insurance transaction by it’s Malaysian member firm, Wong & Partners. The transaction involved the acquisition by Mitsui Sumitomo Insurance Co (“MSI”) of a 30% stake in Hong Leong Assurance Berhad (“HLA”) for RM940,000,000 on 1 October 2010. The share acquisition completed immediately after the acquisition by MSIG Insurance (Malaysia) Berhad (“MSIG Malaysia”), a subsidiary of MSI, of the entire general insurance business of HLA via a scheme of arrangement. The consideration for the business acquisition was satisfied through the issuance of new ordinary shares constituting 30% of the enlarged capital of MSIG Malaysia to HLA Holdings Sdn Bhd (“HLAH”, the holding company of HLA) at a value of RM618,646,291.
The transaction involved:
(a) the acquisition by MSIG Malaysia of the entire general insurance business of HLA (which is a composite insurer) on a zero net asset basis (i.e. the fair value of the assets as at the transfer date shall be equal to the fair value of the transferred liabiliities as at the transfer date), and the consideration was satisfied by the issuance of new ordinary shares constituting 30% of the enlarged share capital of MSIG Malaysia;
(b) the acquisition by MSI of 30% of the equity interest in HLA (which has become a life insurer following its divestment of the general insurance business) from HLAH; and
(c) the proposed rights issue by MSIG Malaysia to raise gross proceeds of RM131,228,000, which rights issue was completed immediately prior to the completion of the business acquisition.
Partner Brian Chia, who led the team, said “This is a complicated insurance merger which we are proud to have worked on and be associated with. It marks one of the biggest Malaysian mergers and acquisitions (M&A) transactions this year,” He added, “This deal sets a benchmark for deal valuation in the Malaysia insurance space, with a valuation of over six times the book value.”
This is a major transaction for MSI, making it the second largest general insurer in the country with a major presence in Malaysia’s life insurance business.
Kentaro Teramura, Assistant General Manager, Business Development Department, MS&AD Insurance Group Holdings, Inc. said of the legal team, “We were very pleased and are grateful with the incredibly proactive support we received from Wong & Partners. It was clear that they understood our business and got beneath the skin of the legal and other issues on this complicated transaction, from the word go. It was a pleasure to work with them.”
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