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FBL Financial (FFG) Shareholders Give Nod to Merger With FBPCIC

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FBL Financial Group announced that its shareholders have approved its merger with Farm Bureau Property & Casualty Insurance Company (“FBPCIC”).  FBPCIC will pay $61 per share in cash for the outstanding shares of FBL Financial Group Class A and Class B common stock, excluding shares owned by FBPCIC and the Iowa Farm Bureau Federation ("IFBF").

On Jan 11, 2021, this Zacks Rank #3 (Hold) provider of individual life insurance and annuity products agreed to merge with FBPCIC for a cash consideration of $528 million or $51 per share. Subsequently, on May 3, the companies announced that the offer price was raised by 8.9% to $575 million or $61 per share. The new consideration reflects an additional $47 million in cash consideration to FBL Financial and represents a 63.8% premium on FBL Financial’s closing share price of $37.25 as on Sep 3, 2020.

Following the closure of the transaction, which is expected in the first half of 2021, IFBF will continue to be the majority owner with 60.5% stake.

FBL Financial through its subsidiary, Farm Bureau Life Insurance Company, sells its individual life insurance and annuity products. The company manages all aspects of two Farm Bureau affiliated property-casualty insurance companies — Farm Bureau Property & Casualty Insurance Company and Western Agricultural Insurance Company. FBL Financial benefits from close ties to the unique needs of the agricultural market and affinity with the Farm Bureau brand, and thus its cross-sell culture results in industry leading cross-sell rates.

FBL Financial believes merging with its long-time partner Farm Bureau will augment its capability to protect the livelihoods and futures of its customers. Per Paul Larson, Chairman of the Special Committee of the FBL Financial’s board of directors. "The amended agreement delivers even more compelling and certain value at a highly-attractive premium.”

Share of FBL Financial have gained 8.6% since the merger agreement was announced on Jan 11, underperforming the industry’s increase of 13.5%.

Given insurance industry’s adequate capital level, players are pursuing strategic mergers and acquisitions. Recently, Arthur J. Gallagher & Co. (AJG - Free Report) agreed to buy certain reinsurance, specialty and retail brokerage operations of Willis Towers Watson plc (WLTW - Free Report) for $3.57 billion. Marsh & McLennan Agency LLC, the middle market agency arm of Marsh & McLennan Companies (MMC - Free Report) , acquired PayneWest Insurance, which is one of the largest independent agencies in the United States.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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