(Bloomberg) -- Fosun International Ltd., the investment arm of Chinese billionaire Guo Guangchang’s conglomerate, agreed to acquire Meadowbrook Insurance Group Inc. for $433 million to expand in U.S property-casualty coverage.
Fosun will pay $8.65 a share in cash for Southfield, Michigan-based Meadowbrook, the companies said today in a statement. That’s 21 percent more than Meadowbrook’s closing price today in New York trading.
Fosun is expanding in insurance as part of a strategy to use funds from policy sales to make investments. The Chinese firm is emulating the model used by Warren Buffett to build Berkshire Hathaway Inc., executives have said.
“This transaction allows Fosun to establish a presence in the important U.S. P&C market,” Guo said in the statement. The deal is “consistent with our strategy of expanding our core insurance business.”
Fosun said in the statement that it has more than a third of its total assets invested in insurance. The company bought an 80 percent stake in the insurance unit of Portugal’s Caixa Geral de Depositos SA this year.
Fosun has a Hong Kong reinsurer, a life-insurance venture in China with Prudential Financial Inc. and a stake in a property-casualty operation in the country. In August, it agreed to buy 20 percent of specialty commercial insurer Ironshore Inc. for about $460 million.
Fosun International is the publicly traded investment arm of Fosun Group. The business also owns European fashion labels, New York’s One Chase Manhattan Plaza and the Studio 8 filmmaker.
The deal is subject to regulatory approval and expected to close in the second half of 2015, the companies said. Meadowbrook will keep its brand name and company headquarters.
KPMG LLP, Towers Watson & Co., PricewaterhouseCoopers LLP and DLA Piper LLP advised Fosun. Willis Group Holdings Plc was Meadowbrook’s financial adviser and Sidley Austin LLP provided legal counsel.
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