Nationwide Mutual to Close on $2.4 Billion Acquisition of Nationwide Financial Jan. 1

Nationwide Mutual Insurance Co. is set to close on its $2.4 billion acquisition of its publicly traded subsidiary, Nationwide Financial Services Inc., on Jan. 1.

Under the deal, Nationwide Mutual is to buy all of Nationwide Financial's outstanding publicly held Class A common stock for $52.25 a share in cash, the companies said in August. The transaction will make Nationwide Financial a private company and a subsidiary of Nationwide (BestWire, Aug. 7, 2008).

The companies have said the $52.25-a-share offer represents a premium of about 38% over the $37.93 closing price of Nationwide Financial's stock on March 7, 2008, the last trading day before Nationwide Mutual disclosed its original proposal. The offer is an increase of about 11% over the original proposal of $47.20 a share.

The benefits of the deal include better alignment and flexibility around best serving customers; opportunities for stronger top-line growth for financial services by better leveraging Nationwide Mutual's large property/casualty customer base; and a simpler ownership structure, a spokesman for Nationwide Mutual said earlier this year (BestWire, March 10, 2008).

Nationwide Financial (NYSE: NFS) sells several financial services and investment products to consumers and offers retirement plans and services through public- and private-sector employers. It's part of the Nationwide group of companies, which is led by Nationwide Mutual Insurance.

Over the past year or so, some insurance holding companies, including mutual insurer Nationwide Mutual, have opted to privatize their publicly held affiliates. These defections from the public market may be motivated by a general sense among the companies that they can manage capital, integrate operations, and reduce regulatory reporting requirements better by being a private entity, experts have said (BestWire, March 17, 2008).

In the third quarter, Nationwide Financial posted a net loss of $346.4 million, mainly due to distress in the financial markets. It took a $315.4 million loss in nonoperating realized investments, of which $257.8 million were other-than-temporary impairments. Results were also affected by $49.1 million in losses from hedge funds and private equities and the mark-to-market of investments (BestWire, Nov. 6, 2008).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)