Zurich Participacces e Representacoes, the Brazilian subsidiary of Zurich Financial Services Group, has signed an agreement to acquire an 87.35% stake in Companhia de Seguros Minas Brasil from Banco Mercantil do Brasil and two private investors.
Zurich Participacces e Representacoes, the Brazilian subsidiary of Zurich Financial Services Group, has signed an agreement to acquire an 87.35% stake in Companhia de Seguros Minas Brasil from Banco Mercantil do Brasil and two private investors.
In addition, Zurich Participacces has signed an agreement to acquire 100% of Minas Brasil Seguradora Vida e Previdencia (MBVP) from Banco Mercantil. As part of this transaction, Zurich Brasil Seguros (Zurich Brasil), a subsidiary of Zurich Participacces, will enter into a long-term exclusive bancassurance agreement with Banco Mercantil for the distribution of life and general insurance products of Zurich Brasil and the acquired companies.
The purchase price for both companies, which is subject to post-closing adjustments, amounts to approximately $179 million. In addition, approximately $31 million consideration is to be paid for the bancassurance agreement plus an earn-out component of up to approximately $31 million, depending on the future performance under the distribution agreement.
The bancassurance agreement will be executed at closing for a period of 20 years, renewable for additional 10 years, at the discretion of the parties. The transaction is subject to the approval of the relevant regulatory authorities and is expected to close by the fourth quarter of 2008. After closing, the transaction will be subject to the mandatory tender offer.