Allianz, Germany’s biggest insurer, plans to buy out the minority shareholders of Euler Hermes, the French trade credit insurer, for € 122 per share.
Headquartered in Munich, Allianz is one of the largest financial services companies in the world. Its core businesses are insurance and asset management. The Company offers property and casualty, life, health, credit, motor vehicle, and travel insurance, as well as and fund management services.
Euler Hermes is a Paris-based credit insurance company that offers insurance bonding, guarantees and collections services to support management of B2B trade receivables. The Company’s proprietary credit intelligence network allows it to analyse the financial stability of a wide range of global companies and sectors.
With this acquisition, Allianz will increase exposure to the attractive credit insurance business segment which reported a solid operating performance in 2016. According to Allianz, this move will strengthen positions in core home markets and in property and casualty. Acquiring Euler Hermes would also increase the overall profitability of the group and provide diversification benefits.
Allianz has already secured 11.3% of Euler Hermes share capital on Nov. 24 which brought Allianz’s stake to 74.3% at a price of € 122. A few days later, the Company announced that it will file a takeover bid at the same price to buy the remaining stock, excluding treasury shares (1.46%), of Euler Hermes for around € 1.85 Bn ($2.2 Bn). The price of € 122 represents a 21% premium to the closing price of the previous trading day.
At 16 times the estimated earnings for 2018, the offer is considered expensive but logical for Allianz. The deal is expected to be accretive, increasing Allianz’s EPS by 1 pp. It is also expected to decrease its capital ratio by 4 pp from 227%, which would still be comfortably above the recommended range of 180 to 220% by Solvency II. No change in the board of Euler Hermes is planned as Allianz remained “supportive” of the strategy of the company. 
On the day of the announcement, Euler Hermes’s share price rose by 21% to a record high € 122.3 and Allianz’s decreased by 0.2% to € 197.5.
Allianz also stated that the acquisition will not have an impact on their ongoing € 3 Bn and planned € 2 Bn share buyback programs.
