By Toby Sterling
AMSTERDAM (Reuters) - Aegon (NYSE:AEG) NV said on Thursday smaller rival ASR would buy its Dutch insurance operations in a cash and shares deal worth around 4.9 billion euros ($4.93 billion) that would see ASR replace it as the country's second-largest insurer.
Aegon will receive 2.5 billion euros ($2.52 billion) and a 29.99% stake in ASR, worth 2.4 billion euros at Wednesday's closing price, the companies said in a joint statement.
The deal, which would create a strong rival for top Dutch insurer NN (NASDAQ:NNBR) Group, must be approved by shareholders and regulators. The companies said they expected it to close in the second half of 2023.
"This is going to be a powerhouse company" on the Dutch market, Aegon Chief Executive Officer Lard Friese told reporters in a video call.
Shares in Aegon rose 7.5% by 0733 GMT while ASR gained 6%.
The deal "helps to accelerate Aegon's strategic transformation whilst seeing ASR further build out its leading position in the Dutch market," Credit Suisse analysts said in a note.
The combined company would be the largest in the Dutch disability insurance sector and the number three in property and casualty insurance, as well as taking a "leading" position in pensions, the companies said.
ASR chief executive Jos Baeten said he expected neither a rival bid nor antitrust difficulties.
"We looked at that very carefully, and it's up to (the Dutch market regulator) to decide ... but we do not expect problems," he said.
Other key insurers in the Dutch market include Allianz (ETR:ALVG), Athora, and Achmea.
Aegon is based in the Netherlands but does most of its business in the United States under the Transamerica brand. It said that of the cash proceeds, it would return 1.5 billion euros to shareholders and use 700 million euros to reduce leverage.
($1 = 0.9930 euros)