Publicly traded National Western Life Group Inc. and Prosperity Life Group announced Monday the signing of a definitive merger agreement in which S. USA Life Insurance Co. Inc., an affiliate of Prosperity Life Group, will acquire Austin-based National Western in an all-cash transaction valued at around $1.9 billion.
As part of the agreement, each issued and outstanding share of National Western common stock will be converted into the right to receive $500 in cash at closing of the merger.
The purchase represents an 87.1 percent premium over the unaffected Class A common stock share price of $267.29 on May 16 and an 11.8 percent premium over National Western’s 30-day volume-weighted average price as of Oct. 6.
National Western chairman and CEO Ross Moody said the sale was the result of a review of strategic alternatives and possible business opportunities to maximize value for the company’s stockholders.
The merger has received the unanimous approval of National Western’s board. The transaction is expected to close in the first half of next year if cleared by National Western’s stockholders and regulators.
Prosperity’s financial advisor is Citi and its outside counsel is Debevoise & Plimpton, including New York partners Kevin Schmidt and David Grosgold and counsel Megan Arrogante.
National Western’s financial advisor is Goldman Sachs & Co. Its outside counsel is Sidley Austin, including partners Mark Metts in Houston and Amanda Todd in Chicago as well as managing associate Alex Enion in San Francisco and partner Andrew Holland in New York.
This is the second time in the last three years that Sidley has assisted with sale of a publicly traded insurance company associated with the Moody family.
In 2021, the same Sidley team represented American National Life Group Inc. on its sale to Brookfield Asset Management Reinsurance Partners Ltd. for $5.1 billion.
Robert Moody Sr. launched National Western with trust income from American National Life, an insurance company started by his grandfather in 1905 and the jewel of the Moody empire, according to Texas Monthly.
The consideration for National Western will be funded through a combination of cash from internal sources, a capital commitment from affiliates of Elliott Investment Management and borrowing under existing facilities or debt commitments.
The capital commitment will be reduced by the amount of any debt actually funded at closing if, and to the extent that, such debt financing is used to fund the payment of merger consideration. The merger’s completion isn’t conditioned on receipt of financing by New York-based Prosperity Life Group or its affiliates.