The Standard sale bruises corporate-town image, but boosts Portland economy … – OregonLive.com
Portland’s already threadbare image as a headquarter town took another hit Friday with news of the planned $5 billion sale of StanCorp Financial Group, an insurance company based here since 1906.
The parent of Standard Insurance Co. is one of the city’s biggest employers and has 2,175 employees statewide.
For now, Tokyo-based Meiji Yasuda Life Insurance Co. said it wanted to expand its U.S. holdings and has no plan to change Standard’s Portland operations. The Japanese group-benefits provider will pay a nearly 50 percent premium to acquire the company, with a deal worth $115 per share.
“We have been studying opportunities in the U.S. market for some time and The Standard stood out as our ideal partner,” Meiiji Yasuda President Akio Negishi said in a statement announcing the deal.
The high takeover price and the near-term employment stability prompted analysts to view the deal as a net positive for Portland. Investors also cheered the news. Stancorp shares surged 48 percent on the New York Stock Exchange to close Friday above $113.
“It’s kind of sad to see one company headquartered here now selling,” said Shawn Narancich,
executive vice president of research and portfolio management at Portland investment firm Ferguson Wellman Capital Management.
“But if somebody was going to buy Standard, based on what’s been disclosed, it probably couldn’t be a better scenario for Portland.”
The hefty premium stands to infuse new wealth into the area.
When StanCorp went public in 1999, life insurance policy holders could receive stock shares. People who retained those shares are likely in for a windfall.
StanCorp insiders are, as well.
Chief executive Greg Ness owned 85,390 shares as of March 3, putting him in line for a potential $9.8 million payout. Chief investment officer Scott Hibbs, director Fred Buckman and former director and state senator Michael Thorne, all owned more than 22,000 shares apiece as of April and May, making the sale potentially worth at least $2.5 million to them.
The company’s largest institutional shareholder, the Vanguard Group, is based in Pennsylvania. It controlled nearly 7 percent of outstanding shares as of March 31 and stands to receive more than $300 million under terms of the sale.
Portland-area investors who benefit from the deal may not necessarily spend the money here, said Robert Whelan, a senior economist at ECONorthwest in Portland. He said Oregon’s relatively high capital gains tax may encourage people to move across the Columbia River to Washington, a state that has no income tax.
Another possibility, he said, is to grant their stock to a nonprofit that would not have to pay the same penalty.
Of course, all the possibilities are contingent on the deal going through, Whelan said. “These things do collapse,” he said. “There’s always a chance.”
Though the all-cash deal has already approved by the boards of both companies, it is subject to regulatory approval and a 25-day period when other firms may submit competing proposals.
Narancich said he does not expect another company to compete with Meiji Yasuda’s price. “This is a great deal for shareholders,” he said.
In a written statement, Ness expressed a similar view. “While we were not looking for a buyer, Meiji Yasuda’s proposal presented a tremendous opportunity to create value for all of our stakeholders – providing a substantial cash premium to our shareholders while enabling us to maintain our current operations and valued employees.”
The announcement was timed alongside StanCorp’s latest earnings report: $64.3 million in net income during the second quarter, up from $40.8 million the same time in 2014. Earnings per share rose from 93 cents to $1.50. Revenues also increased over the year, from $707.1 million to $734.5 million.
— Molly Young