SAO PAULO :Brazilian insurer SulAmerica SA has reached a deal to acquire 100per cent of Sompo Saude, a subsidiary of Japan’s Sompo Holdings Inc in Brazil, it said in a securities filing on Thursday, sending its shares nearly 3per cent higher.
SulAmerica agreed to pay 230 million reais (US$40.33 million) for Sompo, the filing said. The Brazilian insurer said the move was part of a strategy to grow its local health and dental insurance business.
Sompo Saude has 116,000 clients in Brazil, mainly in the state of Sao Paulo, according to SulAmerica.
SulAmerica expects to obtain an additional 650 million reais per year in revenue from the acquisition, it said, adding that it also sees cost savings arising from the transaction, without elaborating.
“This important strategic step will also allow us to improve our market share in our core business in a relevant region,” SulAmerica’s Chief Executive Ricardo Bottas said in a separate statement sent to Reuters.
Shares in SulAmerica were up 2.6per cent at 26.38 reais in morning trading in Sao Paulo, outpacing a 0.45per cent rise on the broader Bovespa index.
Analysts at Guide Investimentos said the acquisition was positive for SulAmerica, noting it reinforces the company’s position in the city of Sao Paulo and its metropolitan area, while also enhancing its growth plans.
The deal still requires approval from Brazilian regulatory bodies.
Newspaper Valor Economico was first to report on the acquisition.
(US$1 = 5.7032 reais)
(Reporting by Gabriel Araujo; editing by Jason Neely and Emelia Sithole-Matarise)