Japan Post Holdings, the Tokyo-headquartered postal and financial conglomerate, has announced that it plans to acquire a 7% stake in U.S supplemental insurance provider Aflac Incorporated.
The company, which is majority-owned by the Japanese government, said that it will acquire 7% of Aflac’s outstanding shares through a trust.
Reuters reported last week that Japan Post was looking to become the largest shareholder in the insurer via a 300 billion yen ($2.6 billion) investment.
The parties explained that the deal would further strengthen their longstanding distribution and business relationship and renew their mutual commitment to the cancer insurance marketplace in Japan.
The investment will be accomplished on a non-dilutive basis to Aflac’s shareholders, as all shares will be acquired through open market or private block purchases in the U.S.
Aflac added that the agreement would not impact its outlook to repurchase an expected range of $1.3 billion to $1.7 billion of its common shares in 2019.
As part of its investment, Japan Post has entered into a shareholder agreement that includes a cap on share ownership of 10%, a minimum holding period or ‘lock-up’ provision, and a standstill provision and voting restriction in light of the fact that the shares will be eligible for 10-for-1 voting rights after 48 months.
These voting restrictions effectively limit Japan Post’s voting rights to no more than 20% of the total voting rights and add further restriction with respect to certain change in control transactions.
Furthermore, Japan Post will not have a seat on Aflac’s Board of Directors and will not have rights to control or intervene in the management of the company.
Japan Post has also agreed to continue to offer Aflac’s cancer products through more than 20,000 postal outlets across Japan, as well as through Japan Post Insurance’s 76 sales offices.
Additionally, companies will explore opportunities for further collaboration in product development, digital technologies, domestic and overseas business expansion, and in utilising the asset management capabilities of Aflac Global Investments.
“Aflac Japan and Japan Post Holdings have established a strong relationship of trust as business partners over the years through the various initiatives regarding cancer insurance,” said Masatsugu Nagato, Director and Representative Executive Officer, President, and Chief Executive Officer (CEO) of Japan Post Holdings.
“This strategic alliance aims to create sustained growth for both companies, and our investment in Aflac Incorporated reinforces our mutual economic interests,” he added.
Daniel P. Amos, Chairman and CEO of Aflac Incorporated, also commented: “Since initially forming our partnership with Japan Post Holdings in 2008, we have enjoyed continuing to develop our alliance with Japan Post Holdings and its subsidiaries.”
“Together we have paid claims and benefits in excess of ¥13 billion on cancer policies sold by Japan Post Holdings’ subsidiaries since the inception of our alliance. We look forward to continuing this relationship in a way that benefits both companies and their stakeholders,” he continued.
“We believe Japan Post Holdings’ strategic investment reflects the overall strength of the Aflac brand, our reputation for quality customer service, and the comprehensive support we provide to our customers, agents and alliance partners.”
