Common stock to be recapitalised into two classes and offered to MetLife stockholders
MetLife has agreed to divest all of its 52% interest in RGA through a tax-free split-off of stock to MetLife stockholders. Under the terms of the transaction, RGA will recapitalise its common stock into two classes of common stock—Class A common stock with the right to elect up to 20% of RGA’s directors and Class B common stock with the right to elect at least 80% of RGA’s directors—and substantially all of MetLife’s interest in RGA will be exchanged for RGA class B common stock. Immediately after this recapitalisation, MetLife will conduct a tax-free split-off, in which it will offer the RGA class B common stock to MetLife stockholders in exchange for shares of MetLife common stock.
MetLife believes that the transaction will provide numerous benefits to MetLife and its stockholders, as well as to RGA and its shareholders, including facilitating MetLife and RGA’s respective expansion and growth. MetLife and RGA also believe that the transaction will strengthen each company’s ability to focus on developing and growing its core businesses.
RGA believes that the transaction will be beneficial to its shareholders because, among other things, it will significantly increase the liquidity and public float of RGA’s common stock by nearly doubling the number of shares held by public shareholders and will provide RGA management with greater flexibility in dealing with the opportunities and challenges specific to its businesses.
MetLife and RGA currently expect that the recapitalisation and split-off transaction will be completed in the third quarter of 2008, but the completion of the transaction is subject to certain conditions, including approval by the holders of a majority of the shares of RGA’s common stock (other than those held by MetLife and its subsidiaries) present at a special meeting to be held for such purpose; the tender by MetLife stockholders of a sufficient number of shares of MetLife common stock in the split-off (which minimum tender amount will be determined by MetLife prior to commencement of the split-off); the receipt of certain regulatory approvals; no withdrawal or adverse change to the IRS ruling that the parties obtained with respect to the transaction; and other customary conditions. Accordingly, there can be no assurance as to when the recapitalisation, the split-off or any of the other transactions described above will occur or if they will occur at all.
In connection with the recapitalisation, RGA will seek shareholder approval of a series of corporate governance-related changes to its articles of incorporation and ratification of a Section 382 shareholder rights plan. The corporate governance-related changes include limitations on the voting power with respect to directors of a holder of greater than 15% of the outstanding shares of RGA class B common stock if such holder does not hold an equivalent percentage of outstanding shares of RGA class A common stock, restrictions on acquiring RGA common stock if such acquisition would make the holder become a “5% shareholder” (as defined in the Internal Revenue Code) to protect certain tax assets of RGA, and, as described below, provisions relating to the potential conversion of RGA class A common stock and RGA class B common stock into a single class of common stock after the split-off. RGA is concurrently announcing the Section 382 shareholder rights plan in a separate press release.
RGA’s board of directors formed a special committee consisting solely of independent directors to evaluate the recapitalisation and related transactions. Upon recommendation of this special committee, RGA’s board of directors has approved the agreement with MetLife and the related transactions, and has resolved to recommend that the RGA shareholders approve such transactions. RGA expects that, following the completion of the transactions, its board of directors will consider submitting to a shareholder vote a proposal to convert the dual-class structure adopted in the recapitalisation into a single-class structure. There can be no assurance, however, that RGA’s board of directors will consider proposing a conversion or resolve to submit such a proposal to RGA’s shareholders and, if submitted, that the RGA shareholders would approve such a conversion.