Countering M3’s prior tender offer to buy Japan’s largest employee-benefits provider (2024)

A new phase for the tender-offer market, and a life insurer’s portfolio reform

What made Dai-ichi Life’s acquisition of Benefit One unusual was less the height of the price than that a major Japanese company squarely countered a tender offer already under way. Within a market convention that had shunned stepping into a rival’s bid without the other side’s consent as “bad manners,” Dai-ichi Life firmed up its intent to counter in about three weeks, raised its price and won the contest. As Bloomberg put it — “Japan’s tender-offer market enters a new phase” — this deal impressed on the market that a counter-bid was no pipe dream but a realistic option. That a parent holding a majority chose the higher price, so that a thick premium reached the minority shareholders too, left an aftertaste different from the parent-subsidiary unwindings seen until now.

Yet the essence of this acquisition is not the flamboyance of attack and defence but a life insurer’s portfolio reform. As a falling birth rate and an ageing population shrink the domestic insurance market, Dai-ichi Life has been trying to shift its footing from a company that only sells insurance to one that extends its points of contact with customers and its cash flow beyond insurance as well. A membership base of some 9.5 million people in outsourced employee benefits is an asset that symbolizes that turn. A company that set out as a mutual, from mutual aid, stepped in earnest into non-insurance services as the move that followed demutualization, overseas acquisition and the holding-company shift — the Benefit One acquisition can be called a deal that vividly reflected the question of what Japan’s life insurers envision beyond a mature domestic insurance model.