Using the capital the IPO unlocked to acquire America’s Protective Life outright (2015)

The overseas M&A that listing made possible

This acquisition can be read as a case in which reworking the capital structure changes the strategies a company is able to choose. A mutual company belongs to its policyholders, and its profits return to them as dividends; raising large-scale capital nimbly from the market is difficult within that mechanism. In 2010 Dai-ichi Life converted to a joint-stock company and listed, remaking itself into a company that could draw capital from the market. That it could step, four years later, into an overseas acquisition of more than ¥500 billion — about $5.7 billion — was possible only because of that change of vessel. With the domestic market mature and merely piling up more policies revealing a ceiling on growth, seeking growth beyond the country’s borders with capital as its weapon was an option opened by the prior decision to demutualize.

That it was a cross-border deal also captures the character of the case. Dai-ichi Life chose a friendly acquisition that kept the incumbent management in place, and through post-merger integration run by a steering committee it sought to reconcile the target’s autonomy with integration into the group. It would take in a mid-sized US life insurer that had itself grown through acquisitions — local management and all — and raise it into a North American growth platform. And this US entry was conceived as one piece with the next reshaping of the governance structure, the shift to a holding company. When a company in a mature market seeks growth beyond its borders, it must rework not merely whom it buys but the shape of its capital and the shape of its governance together — Dai-ichi Life’s Protective acquisition can be looked back on as one template for that.