UNUM(R)
PROVIDENT
Contacts: For UNUM For Provident
Media: George Sard/David Reno Media & Analysts:
Catharine Hartnett Sard Verbinnen & Co. Thomas A. H. White
(207) 770-4356 (212) 687-8080 (423) 755-8996
Analysts:
Kent W. Mohnkern
(207) 770-4392
UNUM AND PROVIDENT ANNOUNCE STRATEGIC MERGER CREATING
GLOBAL LEADER IN DISABILITY INSURANCE
PORTLAND, ME and CHATTANOOGA, TN, November 23, 1998 -- UNUM
Corporation (NYSE:UNM) and Provident Companies, Inc. (NYSE:PVT) today
jointly announced a strategic merger that will create UNUMProvident, the
global leader in disability insurance and complementary special risk
products and services.
Under the terms of a definitive merger agreement approved by the
Boards of both companies, Provident shareholders will receive 0.73 shares
of UNUMProvident in exchange for each Provident common share and UNUM
shareholders will receive one share of UNUMProvident in exchange for each
UNUM common share. The transaction will be accounted for as a pooling of
interests and is expected to be tax-free to shareholders of both companies.
Combined, UNUM and Provident have pro forma revenues of more than $8.4
billion for the twelve months ended September 30, 1998, a current market
capitalization of over $11 billion, 1997 earned premiums of $6 billion and
a significant presence in group and individual disability insurance, group
life insurance and voluntary benefits. Total combined assets exceed $38
billion as of September 30, 1998. The companies expect the transaction to
be accretive to earnings per share in 1999. UNUMProvident anticipates
achieving annual cost savings of approximately $120-130 million.
James F. Orr III, 55, UNUM's chairman and chief executive officer,
said, "This unique strategic merger is the perfect fit of highly
complementary, healthy and growing businesses. The combination gives us
enhanced financial strength, expanded national and international
distribution and comprehensive product offerings to provide superior value
and integrated solutions to a broad range of customers. UNUM's leadership
in group disability and voluntary products combined with Provident's
leadership in
individual products creates the clear leader in the still highly
under-penetrated disability market. It is our intention to take the
absolute best of both companies -- cultures and employees, products and
systems -- and build an organization that is capable of achieving far more
together than either of us could have on our own."
J. Harold Chandler, 49, Provident's chairman, president and chief
executive officer, said, "The merger with UNUM is the next logical step for
Provident and I couldn't be more proud of the result of our shareholders
and our many dedicated employees. Very importantly, our customers will
benefit as we accelerate the implementation of our plan to provide the
marketplace with more comprehensive disability insurance solutions
featuring industry-leading return-to-work programs. Together,
UNUMProvident will have outstanding new growth opportunities. We have
already made substantial progress in defining the new business model for
the merged company and we intend to focus on realizing the full potential
of this unique combination for our shareholders, customers and employees."
Upon the merger of the companies, Orr will serve as chairman and chief
executive officer of UNUMProvident and Chandler will serve as president and
chief operating officer. On July 1, 2001, Chandler will succeed Orr as
chief executive officer of UNUMProvident, and Orr will remain
UNUMProvident's chairman.
The UNUMProvident Board of Directors will be made up of eight current
members of the UNUM Board and seven current members of the Provident Board.
The only inside directors will be Orr and Chandler. The Executive Committee
of the Board will be comprised of Orr, Chandler, two current UNUM directors
and two current Provident directors.
Four other executives will comprise the senior UNUMProvident
management team along with Orr and Chandler. Thomas R. Watjen, currently
vice chairman and chief financial officer of Provident, will serve as
executive vice president of finance, with responsibility for financial
operations, investments and portfolio strategy, and corporate development.
Elaine D. Rosen, currently president, UNUM Life Insurance Company of
America, the largest subsidiary of UNUM Corp., will serve as executive vice
president in charge of North American products, underwriting, claims
management, and customer service. Robert W. Crispin, currently executive
vice president of UNUM, will serve as executive vice president in charge of
North American distribution, Canadian operations, and Colonial Life and
Accident Insurance Company, a UNUM
subsidiary. F. Dean Copeland, currently executive vice president and
general counsel of Provident, will serve as executive vice president of
legal and administrative affairs.
A transition and integration team responsible for overseeing the
combination of the two companies will be comprised of these six
UNUMProvident senior executives. The team will be chaired by Orr and
coordinated by Watjen.
In addition, UNUM's chief financial officer, Robert E. Broatch, will
serve as chief financial officer of the combined company, reporting to
Watjen.
Significant corporate operations of UNUMProvident will remain in both
Portland, Maine and Chattanooga, Tennessee. UNUMProvident plans to maintain
substantial operations in Columbia, South Carolina; Worcester,
Massachusetts; Toronto/Burlington, Canada; and in other North American
cities and international locations.
The transaction is expected to be completed by mid-1999 and is subject
to clearance or approval by certain federal and state regulators, approval
by shareholders of both companies, and customary closing conditions.
Members of the Maclellan family representing approximately 26% of
Provident's common stock have agreed to vote in favor of the merger. Zurich
Centre Group and its affiliates, who hold approximately 14% of Provident's
common stock, have also advised the companies that they intend to vote in
favor of the merger.
As a result of the merger, approximately 58% of UNUMProvident will be
owned by current UNUM shareholders and 42% of UNUMProvident by current
Provident shareholders.
Effective immediately, both UNUM and Provident have rescinded their
existing share repurchase programs. The merger agreement provides for the
payment of termination fees under certain circumstances and UNUM and
Provident have also entered into customary "cross" stock option agreements.
Based in Chattanooga, Provident, through its subsidiaries, is a
leading provider of disability insurance and related products for
individual and corporate customers. Provident has significant operations
throughout the U.S. and Canada.
Based in Portland, UNUM, through its businesses, is the world leader
in group disability insurance and ranks among
the world's leading special risk insurers. UNUM's companies are leading
providers of disability insurance in North America and the United Kingdom,
as well as providers of other employee benefits, including group life
insurance, long term care insurance and payroll-deducted voluntary benefits
offered to employees at their worksites. UNUM has operations in the United
States, Canada, the U.K., the Pacific Rim, Europe, Latin America and
Bermuda.
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