Impact of Aegon's Deal Remains to be Seen
March 1, 1999
It has not yet been determined whether Aegon's acquisition of Transamerica will mean Aegon's IDEX mutual funds and Transamerica's Premier Funds will be marketed together or if the two companies' sales teams will be merged, according to company spokespersons. But, the well-known Transamerica name will continue to be used after the deal closes sometime between June and August, a Transamerica spokesperson said. And, the Transamerica brand name and logo will probably be extended to Aegon products, the spokesperson said.
Aegon and Transamerica announced on Feb. 18 that Aegon would acquire Transamerica for $9.7 billion in cash and stock and assume $1.1 billion of Transamerica's holding company debt. At the time, the companies issued a joint statement emphasizing the strength of Transamerica's asset management business and the wide recognition of its brand name.
"The acquisition will join Transamerica's well-established consumer brand name and franchise in the U.S. with Aegon USA's wide array of highly-ranked retirement and savings products," and international presence, the statement said.
Aegon USA expects to cut annual costs of the combined company by $150 million before taxes, beginning in 2001, by scaling back basic overlapping areas, such as data processing, said Donal Shepard, chairman and chief executive officer of Aegon USA at a news conference in New York.
Shepard did not mention the companies' overlap in mutual funds and variable annuities, however. Besides their respective mutual fund product lines, Aegon offers two variable annuity products - Endeavor and UL - and Transamerica has three - Classic, Catalyst and Bounty.
The companies' statement, however, alluded to redundancies. "Aegon and Transamerica, both major life insurance and pension providers in the USA, have complementary products and distribution channels," the statement, read. Only Transamerica's commercial lending, leasing and real estate information services remains distinct from Aegon's businesses, it added.
It is "premature" to know if or how the companies' products and salespeople will be merged, a Transamerica spokesperson said.
"Both companies are putting a transition plan together, which will take four to six months to complete," the spokesperson said.
Industry consultant Geoffrey Bobroff, president of Bobroff Consultants of East Greenwich, Rhode Island, expects Aegon to pare back staff as it merges with Transamerica, "much like the SunAmerica's of the world, which have tended to buy companies and liquidate their people." But, he said that Aegon should consider the value of Transamerica's sales force because it has been an effective seller of funds and annuities.
The acquisition of Transamerica, the sixth largest life insurer in the U.S., transforms Aegon into the third-largest life insurer and second-largest re-insurer in the US. As part of the acquisition, Aegon will merge Transamerica's insurance business with that of Providian, of Baltimore, which Aegon acquired for $2.6 billion in 1997.
Aegon, based in the Hague, has assets of more than $147 billion. Transamerica, based in San Francisco, has insurance and financial insurance operations worth $58.5 billion.
The combined U.S. operation will be based in San Francisco.