By Park Man-won and Lee Ha-yeon
South Korea’s leading Shinhan Financial Group Co. will take over a controlling stake in OrangeLife, formerly ING Life Insurance Korea Ltd., for an estimated 2.3 trillion won ($2.1 billion) to bolster its life insurance business in what would be its third biggest M&A.
Shinhan Financial Group disclosed on Wednesday that its board approved the plan to acquire the full 59.15 percent remaining stake plus management rights in the life insurer from MBK Partners. The purchase of 48,500,000 common shares would cost 1.66 trillion won at OrangeLife’s Wednesday closing price of 34,200 won.
Shinhan set aside 2.3 trillion won for the buyout in cash, indicating around 640 billion won offering in management premium. The holding company said the final price tag could differ depending on the closing price by the time the deal is signed.
Shinhan has been reviewing the takeover of the life insurer - the fifth largest as of the end of 2016 - since late last year after MBK Partners renewed search for a buyer following a successful initial public offering before its trademark agreement with former owner ING Group expired at the end of this year. The company was rebranded as OrangeLife last month before it lost its trademark rights.
After several attempts to cash in on its investment in the life insurer it acquired from the Dutch financial group in 2013, MBK unloaded its 40.9 percent interest through an IPO worth 1.1 trillion won last year.
The merger with Shinhan Life, eighth in the industry, would make Shinhan the largest in the life insurance industry with assets totaling 62.3 trillion won, elbowing out KB Financial Group as the largest financial conglomerate in Korea.
On Wednesday, shares of OrangeLife fell 1.44 percent to close at 34,200 won, and Shinhan Financial Group 3.19 percent at 42,450 won.