The Hartford Rejects Chubb’s $23 Billion Buyout Offer

The Hartford today announced that its board of directors has unanimously rejected rival insurer Chubb’s unsolicited proposal to acquire The Hartford for $23.24 billion.

The Hartford said its board determined that entering into discussions regarding a strategic transaction “would not be in the best interests of the company and its shareholders.”

The board reaffirmed its commitment to continue to execute on The Hartford’s strategic business plan.

On March 11, Chubb CEO Evan Greenberg proposed an acquisition of Hartford Financial Services for about $23.2 billion in cash and stock in what would have been one of the industry’s biggest deals in years. The offer valued Hartford at $65 a share, about a 13% premium to Hartford’s closing price last Wednesday of $57.41.

A combination “would be strategically and financially compelling for both sets of shareholders and other constituencies,” Chubb said in a statement on its offer, before receiving any response from The Hartford.

Analysts and observers have been generally positive about the idea of the buyout, suggesting the combined company would offer both value and significant marketplace clout. Several indicated they thought Chubb’s $65 per share opening bid was low.

Keefe, Bruyette & Woods Managing Director Meyer Shields said the deal would help Chubb gain “significant scale” in small commercial in a way that could “take quite a long time to build organically.” Shields also noted that The Hartford also would give Chubb “significant scale and demonstrated expertise” in the middle market and global specialty areas, “along with scale in both standard personal lines and group benefits.”

Shields had indicated he thinks a price in the $70-$75 range would be reasonable.

Elyse Greenspan, senior equity analyst with Wells Fargo Securities, observed that The Hartford’s small commercial platform would be a major win for Chubb to acquire.

“The small commercial platform is the ‘crown jewel’ of [The Hartford], in our view, and would be what is enticing to Chubb,” she wrote in an analyst note. Greenspan added that Chubb could generate major savings through the deal.

Goldman Sachs and Deutsche Bank are acting as The Hartford’s financial advisors. Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel to The Hartford.