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AFLAC INC 8-K Report, Material Agreement (Dec 19, 2018)

Filed December 19, 2018For Securities:AFL

Summary

Aflac Incorporated has announced a significant strategic alliance with Japan Post Holdings Co., Ltd. (Japan Post), a major Japanese corporation. This alliance is structured around a capital relationship, where Japan Post, through a trust, will acquire approximately 7% of Aflac's outstanding common stock. The primary goal is to foster synergy and enhance mutual shareholder value, rather than for Japan Post to gain control over Aflac's management. The alliance also aims to strengthen existing initiatives and explore new opportunities related to Aflac's cancer insurance business in Japan. This includes leveraging digital technology, developing new customer-centric products, potential business expansion, and joint investments. The agreements establish a framework for cooperation while ensuring Aflac's operational independence and compliance with regulatory requirements, particularly concerning U.S. insurance laws and foreign ownership.

Key Highlights

  • 1Aflac Inc. has entered into a strategic alliance with Japan Post Holdings Co., Ltd., forming a capital relationship.
  • 2Japan Post will acquire approximately 7% of Aflac's outstanding common stock through a newly established trust (J&A Alliance Trust).
  • 3The alliance aims to generate synergy, align interests, and enhance mutual shareholder value, not to grant Japan Post control over Aflac.
  • 4Cooperation will focus on strengthening Aflac's cancer insurance business in Japan, including leveraging digital technology and developing new products.
  • 5The agreements include specific restrictions, such as standstill provisions, voting agreements, and transfer restrictions on the acquired shares, designed to govern the alliance.
  • 6The deal is subject to various regulatory approvals, including HSR Act clearance and approvals from Japanese and U.S. insurance regulators.
  • 7Aflac will grant J&A Alliance Trust registration rights for its shares and preemptive rights for future stock issuances.

Frequently Asked Questions

The primary objective is to create synergy and align interests between Aflac and Japan Post to enhance mutual shareholder value. This is achieved through a capital relationship and a strategic alliance focused on strengthening Aflac's cancer insurance business in Japan, rather than for Japan Post to control or manage Aflac.

Japan Post, through a newly formed trust named J&A Alliance Trust, will acquire approximately 7% of Aflac's outstanding common stock. The trust will hold these shares as a direct registered owner, managed by a trustee.

The alliance will reinforce existing initiatives and explore new opportunities for Aflac's cancer insurance business in Japan. This includes potential collaboration on sales, reinsurance, awareness campaigns, leveraging digital technology, new product development, and business expansion.

Yes, the agreements include several restrictions. Japan Post Parties are subject to standstill restrictions, limiting actions that could lead to a change of control. J&A Alliance Trust has ownership caps and transfer restrictions on the shares it acquires. The voting of shares is also governed by specific agreements. These restrictions are designed to ensure the alliance's strategic nature and compliance with regulatory requirements.

The alliance is subject to obtaining various regulatory approvals, including expiration of waiting periods under the Hart-Scott-Rodino (HSR) Antitrust Improvement Act, approvals from the domiciliary regulators for Aflac's U.S. insurance companies, and clearance from Japanese authorities like the Japan Fair Trade Commission and the Financial Services Agency. Obtaining these approvals is crucial for the successful consummation of the transactions.