ING Group Acquires ReliaStar for $6.1 Billion
By Cindy Christ

Dutch financial conglomerate ING Group said Monday it would acquire ReliaStar, the eighth largest U.S. publicly held life insurer, in a deal valued at $6.1 billion.

The cash deal values Minneapolis-based ReliaStar at $54 per share and carries a transaction price of $6.1 billion, including $1 billion of existing ReliaStar debt.

In a conference call with reporters, ING said the agreement also contains a $150 million breakup fee if the transaction isn't completed.

The company said the deal substantially increases the scale of its U.S. insurance and mutual fund operations, boosting its overall market to eighth from 19th in terms of total life and annuity premiums.

In addition, assets under management will nearly double to $75 billion from $39 billion, thanks in part to ReliaStar's fast growing Pilgrim Funds, which rank among the top 10 mutual funds in first quarter sales.

"This transaction marks another step ING has taken towards achieving our goal of substantially increasing our presence in the U.S. and furthering our position as a financial services leader in North America," said Godfried van der Lugt, chairman of the Executive Board of ING Group.

The acquisition, which will be financed internally, is expected to add 0.10 euros to earnings in the September 2000 quarter and 0.34 euros in fiscal year 2001.

The company said after-tax synergies would reach $25 million in 2001 and jump to $65 million in 2005, consisting of about 30 percent in additional revenues and 70 percent in savings.

ReliaStar will continue to operate as part of ING Americas under the name ING ReliaStar. The firm's Chairman and CEO John Turner will become a member of the ING Executive Committee and vice chairman of the Americas region.

The transaction is expected to close in third quarter 2000 subject to shareholder and regulatory approvals.

Based in Amsterdam, the Netherlands, ING Group is a global financial conglomerate active in banking, insurance and asset management in more than 65 countries, with nearly 90,000 employees.

ING, whose expansion plans have been well publicized in the financial press, said today's acquisition could be followed by others and that it hasn't ruled out a second bid to obtain No. 1 U.S. health insurer Aetna Inc. (AET).

In February, Aetna rejected a $10 billion offer from ING and managed care provider WellPoint Health Networks (WLP).

Shares in ReliaStar (RLR), which soared 40 percent Friday on merger rumors, added another $6.75, or 15.3 percent, to close at $50.75.

The American Depositary Receipts of ING Group (ING) were up $1.88, or 3.5 percent, at $55.81 on the New York Stock Exchange.