MAPFRE announced that it will acquire 100% of Commerce’s share capital for $2.21 billion, indicating a decisive step in its international expansion and the largest investment in the history of the group, according to a statement made by the Spanish company.
MAPFRE will pay the consideration entirely in cash, which it plans to finance through an equity capital raising of EUR 500 million ($718 million), the issuance of bonds up to EUR 800 million ($1,148 million), with the balance coming from internal resources. The acquisition is expected to have a positive financial return for MAPFRE's shareholders from the beginning, raising earnings per share. The transaction is subject to the relevant regulatory authorizations and to the requisite approval of the merger agreement by the holders of at least two-thirds of the shares of COMMERCE common stock.
Commerce is the leading writer of non-life personal insurance lines in the state of Massachusetts (US), where it holds a 31.5% market share in personal auto Insurance. The US insurer is currently involved in an expansion plan outside its state of origin for which it holds licenses in all 50 states of the Union and operates in 17 of them.
MAPFRE, is present in 40 countries, and is the leading insurer in Spain; in non-life insurance, it ranks as the largest group in Latin America and the tenth largest in Europe. At year-end 2006, MAPFRE generated total revenues of $17.7 billion and has a market capitalization in excess of $11 billion.