RBC Capital Markets On ACE's $28.3 Billion Acquisition Of Chubb: 'Don't Think Tax Savings Is The Primary Motivator Here'

ACE Limited ACE and Chubb Corp CB announced on Wednesday that the former will be acquiring the latter in a $28.3 billion cash and stock deal. As part of the deal, Chubb shareholders will receive 0.6019 ACE shares for every Chubb share and $62.93 in cash.

Mark Dwelle, RBC Capital Markets analyst, was on CNBC recently to weigh in on this deal.

A Global Power

"Definitely a transformative deal for ACE," Dwelle began. "I mean Chubb is a leading commercial insurer [and] they are known as one of the very best companies for high net worth personal lines businesses. ACE is a key player in North America in [both of those] deals."

"But brings together a company that really is now a global power. They are up in the echelons, bigger than AIG now from a commercial insurance standpoint in the realm with some of the large Japanese insurers and the large European insurers."

Tax Savings

He continued, "There's probably some degree of tax saving to this. ACE is domiciled in Switzerland and that's where the combined companies will be domiciled. I don't think that's the primary motivator here though. I think, this is the opportunity to pull together 2 very strong franchises [in] each and every aspect of markets and then make one franchise that is truly a global player almost unrivaled by anyone else."

Valuation

On the valuation that this deal was done, Dwelle said, "pretty attractive valuation and one that Chubb hasn't seen in a very long time."