Hartford Walks Away From Chubb’s Merger Offer

Property and casualty insurer Chubb Limited issued a statement on Monday stating that it is “disappointed” after Hartford Financial Services decided to walk away from discussions regarding the combination of their businesses.

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Chubb Limited (CB), however, said that it will continue to seek opportunities for acquisitions. The company said that it has the ability to capitalize on a favorable insurance market environment and is firmly focused on creating value for shareholders.

Chubb’s statement came days after Hartford (HIG) said on March 23 that its board of directors had unanimously rejected Chubb’s business combination offer. Hartford said that entering into a discussion relating to the strategic transaction would not be in the best interests of shareholders.

Notably, Chubb had submitted an unsolicited and non-binding takeover proposal to acquire Hartford in a mix of cash and stock transaction. The company had agreed to pay $65 for each Hartford share. (See Chubb stock analysis on TipRanks)

Following the statement, Wells Fargo analyst Elyse Greenspan reiterated a Buy rating. In a note to investors, Greenspan wrote, “We continue to think HIG is worth 1.8x in a takeout, which is around $81 per share, which is based on past deals within the P&C (Property & Casualty) sector, and do think that at some point CB does come back with a higher offer. HIG is trading down modestly today (down 3.1%, versus the S&P which is down 0.7%) and still sits above the $65 per share takeout offer from CB as we believe the market also expects there could still be a potential M&A (Merger & Acquisition) transaction.”

Overall, the Street has a Moderate Buy consensus rating on the stock based on 8 Buys and 3 Holds. The average analyst price target of $179.36 implies upside potential of about 11.9% to current levels. Shares have gained about 47.9% in one year.