Providian Corporation Announces $3.5 Billion Merger with AEGON USA

Strategic Insights -

Providian Corporation has announced a merger with AEGON USA, a wholly owned subsidiary of AEGON N.V., valued at $3.5 billion. The deal involves a tax-free exchange of stock and the assumption of $780 million in debt and $100 million in Monthly Income Preferred Stock (MIPS) by AEGON USA. This transaction is part of a larger strategic reorganization of Providian Corporation, which includes the spin-off of Providian Bancorp to its shareholders. As a result, Providian Bancorp will become a separate publicly traded company, utilizing the Providian name.

Key Takeaways:

  • The merger is valued at $3.5 billion, with a tax-free exchange of stock of AEGON N.V. shares valued at $2.62 billion and the assumption of $780 million in debt and $100 million in MIPS.
  • The deal is part of a larger strategic reorganization of Providian Corporation, which includes the spin-off of Providian Bancorp to its shareholders.
  • Providian Bancorp will become a separate publicly traded company, utilizing the Providian name.
  • Irving Bailey, chairman and chief executive officer of Providian Corporation, will join AEGON USA as vice chairman of the board of directors upon completion of the transaction.
  • AEGON USA's operating groups will remain intact, with four separate divisions operating as independent businesses targeting customers through focused marketing.
  • The merger is conditioned upon shareholder approval and various regulatory approvals, with a closing expected in mid-1997.
  • Providian Bancorp has grown into one of the most profitable consumer banking operations in the country, with total managed loans of more than $9 billion.
  • The banking business has an excellent track record of increased earnings and receivables growth, and is well-positioned to take advantage of significant market demand for its products.

Statistics:

  • $3.5 billion: Merger value
  • $2.62 billion: Value of tax-free exchange of stock of AEGON N.V. shares
  • $780 million: Debt assumed by AEGON USA
  • $100 million: Monthly Income Preferred Stock (MIPS) assumed by AEGON USA
  • $163 million: Pretax earnings of Providian Bancorp for the first nine months of 1996, up 20 percent over the same period in 1995
  • 75 percent: Percentage of total revenues represented by life insurance and related pension, savings, and investment products for AEGON N.V.

Sources:

  • Providian Corporation, December 30, 1996
  • PR Newswire
  • The New York Stock Exchange (NYSE) - PVN, Providian LLC's Monthly Income Preferred Stock (MIPS) - PVN Pr M
  • AEGON N.V. - Amsterdam, Basel, Geneva, London, Tokyo, and Zurich exchanges
  • Source: Providian Corporation /CONTACT: Bonnie Otto, 502-560-3019, or Jeff Rosen, investors, 502-560-2992 or Monica Hall, investors, 502-560-2193, all of Providian Corporation