Major Corporate Deals and Economic Developments

Strategic Insights -

Lincoln National Corporation is set to acquire rival Jefferson-Pilot Corp. in a deal worth $7.5 billion, creating one of the largest publicly traded life insurance companies in the U.S. The combined entity will have annual sales of $9.5 billion and employ around 9,600 people. The deal is expected to be completed in the first quarter of 2006 after shareholder and regulatory approval.

The acquisition is part of a trend of consolidation in the insurance industry, with companies seeking to reduce costs and increase efficiency. The deal is also expected to generate annual cost savings of around $180 million. Lincoln National will retain its name and headquarters in Philadelphia, while Jefferson-Pilot will continue to operate from its existing facilities in Greensboro, N.C. and Fort Wayne, Ind.

Meanwhile, Sprint Nextel is seeking a judge's intervention in a dispute over the valuation of its planned acquisition of affiliate Nextel Partners. The phone company owns 32% of Nextel Partners and plans to buy the remaining stake after a shareholder vote and a determination of fair market value by appraisers.

Key Takeaways:

  • Lincoln National's acquisition of Jefferson-Pilot is the largest insurance deal in the U.S. in 2005, totaling $7.5 billion.
  • The combined entity will have annual sales of $9.5 billion and employ around 9,600 people.
  • The deal is expected to generate annual cost savings of around $180 million.
  • Sprint Nextel is seeking a judge's intervention in a dispute over the valuation of its planned acquisition of affiliate Nextel Partners.
  • The phone company owns 32% of Nextel Partners and plans to buy the remaining stake after a shareholder vote and a determination of fair market value by appraisers.
  • EBay Inc. has agreed to buy an online-payment business from VeriSign Inc. for $370 million, expanding their security measures for users.
  • NASD fined eight brokerages nearly $7.8 million for steering customers to mutual funds that paid for preferential treatment.
  • WebMD parent Emdeon Corp. defended chairman's $466,000 reimbursements for personal use of company resources.
  • General Motors Corp. was cut to "sell" from "neutral" by Banc of America Securities amid bankruptcy fears.
  • Dana Corp. will restate earnings for six quarters to fix improper accounting and will withdraw its profit forecast for 2005.
  • Telus Corp., Canada's No. 2 telephone company, reached a tentative labor agreement with the Telecommunications Workers Union.

Statistics:

  • Lincoln National's acquisition of Jefferson-Pilot totals $7.5 billion.
  • The combined entity will have annual sales of $9.5 billion.
  • Annual cost savings from the deal are expected to be around $180 million.
  • Sprint Nextel owns 32% of Nextel Partners.
  • EBay Inc. is buying an online-payment business from VeriSign Inc. for $370 million.
  • NASD fined eight brokerages nearly $7.8 million.
  • General Motors Corp.'s shares fell to $25.48, down nearly 10% on the day.
  • Dana Corp. will restate earnings for six quarters.

Sources:

  • "Lincoln National to buy Jefferson-Pilot Corp. for $7.5 billion," Bloomberg News, October 24, 2005.
  • "Sprint Nextel seeks judge's help in dispute over Nextel Partners," Bloomberg News, October 25, 2005.
  • "EBay Inc. to buy VeriSign payment unit for $370 million," Bloomberg News, October 25, 2005.
  • "NASD fines brokerages $7.8 million for steering customers to mutual funds," Bloomberg News, October 24, 2005.
  • "WebMD parent defends chairman's $466,000 reimbursement for personal use of company resources," Bloomberg News, October 24, 2005.
  • "General Motors Corp. cut to 'sell' from 'neutral' by Banc of America Securities amid bankruptcy fears," Bloomberg News, October 24, 2005.
  • "Dana Corp. to restate earnings for six quarters to fix improper accounting," Bloomberg News, October 24, 2005.
  • "Telus Corp. reaches tentative labor agreement with Telecommunications Workers Union," Bloomberg News, October 24, 2005.