UNUM Corp. shares jumped 5.5 percent Monday after the insurance holding company said it will acquire Tennessee insurance company Provident Cos. Inc., in a deal worth about $5 billion. The deal will create UNUMProvident, the dominant company in disability insurance.
UNUM (UNM) said Provident (PVT) shareholders will receive 0.73 shares of UNUMProvident in exchange for each Provident common share and UNUM shareholders will receive one share of UNUMProvident in exchange for each UNUM common share.
UNUM shares were up 2 5/8 to 50 3/4, while Provident shares jumped 2 1/4, or 7 percent, to 35 5/8 Monday after the deal was announced.
"The merger creates the global leader in disability insurance, no matter how you look at it," said UNUM spokeswoman Catharine Hartnett.
UNUM and Provident said they expect annual cost savings of about $120 million to $130 million from the merger. The deal, subject to approval by stockholders and regulators, is expected to be completed by mid-1999.
UNUM said both companies expect job cuts, but how many remains to be seen.
By Lisa J Ulmer, CBS MarketWatch