Why Insurer National Western Life's Shares Are Surging Today?

National Western Life Group Inc NWLI shares are trading higher by around 14% after the company inked a definitive merger deal with Prosperity Life Group for about $1.9 billion in an all-cash transaction.

As per the deal, each issued and outstanding NWLI Class A and Class B common shares will be converted into the right to receive $500 in cash at the merger closure. 

The merger consideration represents an 87.1% premium to the unaffected Class A Common Stock share price of $267.29 on May 16, 2023, and a 20% premium over NWLI's closing price on October 6, 2023. 

The merger, unanimously approved by the Board of Directors, is expected to close in H1 2024 upon meeting certain customary closing conditions.

"The acquisition of National Western represents a significant milestone in the continued expansion of our insurance business. We look forward to welcoming National Western to Prosperity Life Group. National Western's capabilities will further complement our ambition to deliver a compelling value proposition to our policyholders and the company," stated Nicholas von Moltke, President and CEO of Prosperity Life Group.

As of June 30, 2023, NWLI's cash and equivalents stood at $291.8 million. 

National Western stockholders that collectively own common shares representing approximately 29.7% of the total voting power of the company's common shares have executed voting and support agreements with S. USA Life Insurance Company, Inc. (SUSA), an affiliate of Prosperity Life Group.

Price Action: NWLI shares are up 13.39% at $473.05 premarket on the last check Monday.