Conseco to Buy Green Tree Financial in $6.5 Billion Deal

Conseco, a life and health insurer, has agreed to buy Green Tree Financial, a consumer finance company, in a deal worth $6.5 billion. The acquisition is a departure from Conseco's focus on life and health insurance and annuities, and will bring Conseco into new industries such as home equity loans and credit cards. Green Tree's shares jumped 25% to $38.87, while Conseco's shares dropped 15% to $49.12, erasing $1.1 billion from the deal's announced value.

Key Takeaways:

• The acquisition is a strategic move by Conseco to diversify its business and enter growing industries such as consumer finance.
• Conseco plans to swap 0.9165 shares for each share of Green Tree, a value of $45.02.
• The deal will bring Green Tree's 40 million customers and 190,000 agents under Conseco's umbrella, allowing for extensive cross-marketing opportunities.
• Green Tree will operate as a separate unit within Conseco, run by its chairman and CEO, Lawrence Coss.
• Conseco expects the acquisition to boost its per-share profit by the third quarter this year, excluding the benefits from selling Green Tree's loans through Conseco agents.
• The acquisition comes after Green Tree's share price dropped 40% in the past six months, and the company restated its earnings for the fourth quarter of 1996 to show a $26.5 million loss.

Statistics:

• $6.5 billion: The value of the deal
• 0.9165: The number of Conseco shares to be swapped for each Green Tree share
• $45.02: The value of the swap
• $38.87: Green Tree's share price before the deal
• $9.87: The increase in Green Tree's share price due to the deal
• $49.12: Conseco's share price before the deal
• $8.62: The decline in Conseco's share price due to the deal
• $1.1 billion: The amount erased from the deal's announced value
• 190,000: The number of agents selling Conseco insurance
• 25-40 million: The estimated number of homes that will be able to obtain loans through Conseco

Sources:

• Bloomberg News