Prudential acquires Assurance IQ for $2.35B plus additional earnout up to $1.5B
Prudential Financial (PRU) announced that it has signed a definitive agreement to acquire Assurance IQ, “a profitable, fast-growing direct-to-consumer platform that transforms the buying experience for individuals seeking personalized health and financial wellness solutions.”
Terms of the acquisition include a total upfront consideration of $2.35 billion, plus an additional earnout of up to $1.15 billion in cash and equity, contingent upon Assurance achieving multi-year growth objectives.
Under the terms of the agreement, Assurance will become a wholly owned subsidiary of Prudential under the U.S. Businesses division.
Assurance co-founders Michael Rowell and Michael Paulus will continue to focus on the growth of Assurance.
Rowell will remain CEO of Assurance and report to Andrew Sullivan, who will assume the role of executive vice president and head of U.S. Businesses as of December 1.
Paulus will remain president of Assurance.
The acquisition is expected to be modestly accretive to EPS and ROE starting in 2020.
In addition to enhancing the growth of Prudential’s financial wellness businesses, the acquisition is expected to generate cost savings of $50 million to $100 million, in addition to the $500 million of expected margin expansion by 2022 discussed at Prudential’s June Investor Day.
Prudential plans to use a combination of its current cash, debt financing and equity to fund the acquisition, which is expected to close early in the fourth quarter of 2019. Prudential’s Board of Directors unanimously approved the transaction.
Prudential’s Board of Directors has authorized a $500 million increase to its share repurchase authorization for calendar year 2019.
As a result, the share repurchase authorization for the full year 2019 is $2.5 billion.
As of June 30, Prudential had repurchased $1.0 billion of shares of its common stock under this authorization.
Prudential expects to fully utilize this increased share repurchase authorization by the end of 2019.
PRU +$2.21 to $81.85
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