Q: Hi 5i, thoughts on their purchase today? Thx.
5i Research Answer:
It is quite a large deal for the company, at more than one-third of its market cap. Price is OK at 1.4X book value, and it is immediately accretive to earnings. It moves DFY into fourth place for P&C insurers in Canada. The company says it provides a 20% return over three years. Travelers has a good, long history, with $1.6B in annual premiums. We think it looks good and the market loves the deal as well today with a big move in the share price.