NEW YORK (CNNfn) - Allstate Corp. Friday continued its recent alliance activity, reaching its "good hands" into the workplace insurance business to buy American Heritage Life Investment Corp. for about $900 million.
As part of the purchase, which will be paid for in cash and stock, Allstate also will swallow roughly $200 million in American Heritage Life's debt, bringing the deal's total value to $1.1 billion.
The $32.25-a-share offer provides a 20 percent premium on the shares of Jacksonville, Fla.-based American Heritage Life (AHL) in comparison to the Thursday closing price of 26-15/16 a share.
The deal is the latest in a recent Allstate alliance binge. Earlier this month, the company inked a $1.2 billion buyout of the auto and homeowner insurance business of CNA Financial Corp.; in March, Allstate lined up with money manager Putnam Investments to create a variable annuity product line.
For Allstate, the buyout of American Heritage Life - whose activity is focused in the Southeast -- accelerates the planned diversification of its product lines and taps into what the Northbrook, Ill.-based insurer sees as a solid growth opportunity.
"What we are getting here is a company with a proven track record, No. 3 in one of the fastest-growing markets anywhere in the life-insurance business, and an opportunity for us to share in that marketplace and expand the growth," said Edward Liddy, Allstate chairman and chief executive, in an interview with CNNfn.
Allstate expects the merger to dilute its earnings "minimally" -- or by about 2 cents per share -- in the first two years after the closing, Liddy said. The two companies expect to close the deal later this year.
After 2001, the merger is expected to boost Allstate's earnings and foster revenue growth. Liddy declined to specify what Allstate has targeted for earnings growth in the following years.
Allstate also plans to repurchase shares, equal to the value of the American Heritage Life deal, in the open market. That is on top of its current $2 billion repurchase plan -- of which about $820 million worth of shares had been bought back as of June 30.
For its part, American Heritage Life said the deal will expand its delivery channel with the resources and presence of Allstate.
American Heritage Life shareholders have the option of receiving their payout in cash or stock. The holding company American Heritage Life owns about 40 percent of American Heritage Life Insurance, an insurance provider.
Shares of Allstate (ALL) closed Thursday at 36-13/16, up 1/2.