NASHVILLE, Tenn. -- Directors of NLT and American General jointly announced Tuesday they would merge their conglomerates in a $1.5 billion deal and form the nation's fourth largest shareholder-owned insurance firm.
The announcement ended a sometimes bitter takeover battle between the two insurance giants.
NLT's board met in Nashville while American General's board met in Houston to formally approve the agreement.
Under the terms of the merger agreement, NLT shareholderws will have the right to elect to receive $46 a share in cash for 15,000,000 shares. The remaining NLT shares will be converted into a combination of American General fixed income debt and-or equity securities, which may be convertible to American General Common stock.
According to an announcement, Walter Robinson, NLT's chief executive officer, and four other present NLT directors will be nominated for election to an expanded American General board.
'The merger agreement with NLT represents a major step in American General's development. The combination of these two organizations will result in a larger, stronger entity -- one which is well positioned with the financial resources to deal effectively with the volatile condition of today's market place,' American General Chairman Harold Hook said.
'On the basis of assets, the combined companies will be the nation's fourth largest shareholder-owned insurance organization and eighth largest diversified financial company.'
Robinson observed that 'through the concerted efforts of both parties, NLT and American General have reached an agreement on how to combine our companies on a basis that is in the best interests of NLT's shareholders, policyholders, employees and customers.
'The combination of NLT and American General makes good sense, and we are pleased that we were able to agree to a combination in a constructive manner. For NLT shareholders, this agreement represents a very substantial improvement over the terms of the exchange offer originally proposed by American General.'
Necessary to the merger are approvals of shareholders of the firms, the insurance departments of Texas, Tennessee and Iowa, the Federal Home Loan Bank Board, and the Federal Communications Commission. Regulatory approval could take up to six months or longer.
NLT is Tennessee's largest corporation and owner of the Grand Ole Opry and the Opryland amusement complex.
The jousting between NLT and American General began last year when American General moved to increase its interest in the Tennessee company from just under 10 percent to 25 percent.
This maneuver was vigorously opposed by NLT management and the preliminary skirmish ended in favor of NLT when the Tennessee Department of Insurance denied approval for the acquisition.
American General, which has assets of $8.3 billion, stepped up the battle April 16 when the firm made a public offer to take over NLT, which has assets of $4.6 billion.
The offer was in the form of a stock trade -- 0.8 share of American General for one share of NLT. Brokers estimated the trade was the equivalent of about $33 a share for NLT stock.
NLT rejected the proposal, saying that the dollar value per share offered was less than the book value of more than $37 a share.
NLT then offered to purchase 51 percent of the shares of American General for $50 a share. The deal would have amounted to $620 million.
NLT did purchase just under 10 percent of the outstanding shares of American General after upping its offer to $55 a share.
Then, on June 23, American General offered to purchase controlling interest in NLT for $46 a share, a figure substantially above the company's price on the New York Stock Exchange.
Last week Robinson and Hook met in New York and came up with the agreement for NLT to become a subsidiary of American General.
American General has about 27,500,000 shares outstanding on a fully diluted basis while NLT has 35,400,000.
