NEW YORK (CNNfn) - Dexia, Europe's largest municipal lender, announced on Tuesday two acquisitions worth almost $4 billion -- moves aimed at making the Belgian-French bank group a major player in global public finance and European banking.|
Dexia, which has assets of more than $230 billion, said it would buy U.S.-based Financial Security Assurance Holding (FSA) for $76 a share or a total price of $2.6 billion. Dexia said the acquisition of bond insurer FSA would make it the leader in public financing in the United States.
The group also announced its acquisition of Dutch bank Labouchere Rentegroifonds from financial services concern Aegon NV for 896 million euros ($864.5 million), a move it said would further strengthen its position in asset management in Europe.
Dexia's chief executive officer, Pierre Richard, said the merger, which is expected to close in the second quarter, marked a major step for the group.
"A combination of Dexia and FSA will create a global leader in public finance and specialized financing for corporations. In the U.S., Dexia's financial backing will further enhance FSA's ability to compete successfully in the municipal and asset-backed insurance sectors," Richard said.
The transaction has been approved by the board of both companies
Shares of New York-based FSA (FSA: Research, Estimates) rocketed following the announcement, gaining 14-1/16 to 71-3/4 in afternoon trading on the New York Stock Exchange.
Trading in Dexia shares in both Brussels and Paris was halted ahead of its announcement. In Brussels, Dexia shares were up 5.73 percent at 136.50 euros, ahead of the news, while in Paris the shares rose 4.34 percent to 137.1 euros.
FSA Holdings chairman and chief executive, Robert P. Cochran, said the merger would enable FSA to develop its core expertise in the insured markets and significantly expand its participation in international markets.
"FSA is a very strong and independent company. It's a Triple-A on the S&P and on Moody's. Dexia is a highly rated bank in the world, with a public finance focus like us. We see the opportunity as leading to growth in our business and giving great value to our existing shareholders, "Cochran said. "This combination will help us to expand our business globally and develop our new financial guaranty products."
Cochran said there would be no layoffs at FSA following the merger, adding that FSA would operate as a separate subsidiary of Dexia.
After the transaction is completed, FSA's claims-paying ability will continue to be rated Triple-A by Fitch IBCA, Moody's and Standard & Poor's.
--From staff and wire reports