ING Group would achieve its goal of joining the top 10 in the U.S. insurance market with its planned purchase of Aetna's financial services and international businesses for $5 billion in cash and $2.7 billion in assumed debt.
The acquisition would make ING No. 1 in the U.S. in life and annuity premiums. The sale of the Aetna lines had long been rumored, stoked by a failed joint bid for them by ING and Wellpoint Health Networks earlier this year.
The acquisition will provide "our long-desired position in the U.S. insurance market," said Edwald Kist, chairman of the executive board of Amsterdam-based ING Group, and makes ING number six in statutory assets in the United States and No. 1 in the size of its U.S. broker/dealer network, he said.
The acquisition would also strengthen its operations in Asia and make it the 11th-largest asset manager in the world.
Mr. Kist spoke on videotape at a press conference with other executives in Hartford, Conn. The acquisition is expected to be completed in December.
Under the agreement, Hartford-based Aetna would spin off to its shareholders a new health business, which would include Aetna U.S. Health care, Group Insurance and Large Case Pensions, and Aetna Global Benefits. Simultaneously, the parent company and its remaining subsidiaries, the financial services businesses and the international business, would merge with a newly formed subsidiary of ING.
Aetna shareholders would receive one share in the new health company, which would be named Aetna Inc., and approximately $35 in cash for each share.
The businesses ING is purchasing would retain the brand name of Aetna for three years before being changed to an ING brand, explained Glenn Hilliard, chief executive officer of ING Financial Services International-North America.
Financial analysts said the deal gives ING the best parts of Aetna's business and leaves the insurer with the more problematic health care concern.
"I really thing the easiest task to take would have been to sell everything, but by selling the two lines they did, it shows that those were the two lines that were saleable. The health care business is not in good enough shape to sell today. This has nothing to do with Aetna deciding that it wants to become a health care company," said Lori Price, senior health care services analyst for Chase H&Q in New York.