published Wednesday, March 9th, 2011

Unum rejects buyout offer

Takeover talks broke down in January between Canadian life insurer Sun Life Financial and Chattanooga-based Unum after the parties couldn’t agree on the terms of Unum’s sale or how the merged company would be run, people familiar with the matter say.

Unum announced a $1 billion share buyback program following the disintegration of talks — a move that pleased analysts such as Colin Devine of Citi Investment Research.

“They haven’t chased sales; they’ve focused on good underwriting,” he said at the time.

Unum is not for sale, but could be open to solicitations, according to the online report Tuesday from the Wall Street Journal.

Sun Life, with a market capitalization of $18 billion, has been looking to expand into the U.S. through acquisitions for several years.

Though it could not close the deal with Unum, the aborted purchase is part of a larger trend of acquisitive Canadian companies that were able to conserve capital during the recession.

Unum, currently capitalized at around $8 billion, has steadily gained momentum under CEO Tom Watjen in spite of turbulent investment markets worldwide.

The insurer increased operating income 6.6 percent in 2010 over 2009, growing per-share earnings to $2.69 from $2.56 the previous year.

“Financial strength remains a top priority for our company,” Watjen said soon after the talks ended.

The company’s stock closed at $26.44 per share Tuesday after the story broke, up 63 cents.

Unum anticipates operating income per share to grow from 6 percent to 12 percent in 2011, an estimate that includes the effect of the company’s share repurchase.

Contact staff writer Ellis Smith at esmith@timesfreepress.com or 423-757-6315.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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