Assicurazioni Generali SpA (G), Italy’s biggest insurer, agreed to buy the 49 percent stake it doesn’t own in its eastern European venture with private-equity firm PPF Group NV for 2.5 billion euros ($3.3 billion).
Generali will acquire about half the stake by March 28 for 1.29 billion euros and the rest at the end of 2014, the Trieste, Italy-based company said in a statement today. The insurer will use proceeds stemming from bonds sold in December to finance the first purchase and part of the amount will return to Generali as reimbursement of PPF’s debts. The net amount payable by Generali in the first part of the purchase will be about 1.1 billion euros, the insurer said.
Generali and Amsterdam-based PPF, controlled by Czech billionaire Petr Kellner, formed the joint venture in 2007, combining their insurance assets in eastern Europe to create a company with 9 million customers in 12 countries. Mario Greco, who took over as chief executive officer of Generali in August, pursued the deal as part of a plan to boost profit by focusing on emerging markets.
“This transaction eliminates all uncertainty over our development strategy in central and eastern Europe and the resources required from the group to put it in place,” Greco said in the statement. “We’ll be able to take full advantage of our investment and focus on developing our core insurance business while improving competitiveness and profitability.”
The two companies also agreed to swap some assets, including the combined 38.5 percent stake in Russian insurer OEO Ingosstrakh, which will be transferred to Generali.
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