Conseco Announces Sale of Western National Corp. Stake to American General Corp.

Strategic Insights -

Conseco, Inc. announced the sale of its 40 percent equity interest in Western National Corp. to American General Corp. for $274 million in cash, or $11.00 per share. This transaction is subject to regulatory approvals and is expected to close by year-end, with Conseco expecting to recognize a modest after-tax net gain on the sale. The sale allows Conseco to realize the value created in Western National Life under its management and reinforces its commitment to its shareholders.

Key Takeaways:

  • Conseco executed a definitive agreement to sell its 40 percent equity interest in Western National Corp. to American General Corp. for $274 million in cash, or $11.00 per share, reflecting a 2.3 times multiple of its original $45 million investment.
  • The sale is subject to regulatory approvals and is expected to close by year-end, with Conseco anticipating a modest after-tax net gain.
  • The transaction includes revisions to Conseco's agreements with Western National Corp., including a reduction in investment services management fees from 18 basis points to 10 basis points and the possibility of terminating the arrangement without penalty as early as mid-1996.
  • Conseco expressed confidence in the leadership of Mike Poulos and his team, which will continue to build value for Western National Corp. shareholders.
  • The sale highlights Conseco's commitment to its shareholders, with the company intending to use the proceeds for general corporate purposes, including the repurchase of its common stock.

Statistics:

  • $274 million: Total purchase price for Conseco's 40 percent equity interest in Western National Corp.
  • $11.00: Purchase price per share
  • 2.3: Multiple of Conseco's original $45 million investment
  • $45 million: Conseco's original investment in Western National Corp.
  • $258 million: Expected net cash proceeds from the sale (after taxes and expenses)
  • $213 million: Excess of net cash proceeds over Conseco's original investment
  • 40%: Equity interest in Western National Corp. sold by Conseco

Sources:

  • "Conseco, Inc. Announces Transaction Involving Western National Corp." - Business Wire, December 2, 1994