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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 19, 1999
THE GUARANTEE LIFE COMPANIES INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-26788 47-0785066
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(State of Incorporation) (Commission File Number) (IRS Employer Identification
Number)
8801 Indian Hills Drive,
Omaha, Nebraska 68114
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(Address of principal executive offices) (Zip Code)
(402) 361-7300
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
(a) The registrant issued the following press release on September 20,
1999:
[JEFFERSON-PILOT [THE GUARANTEE LIFE
CORPORATION LOGO] COMPANIES INC. LOGO]
press release
JEFFERSON-PILOT CORPORATION AND THE GUARANTEE LIFE COMPANIES INC. SIGN
ACQUISITION AGREEMENT
FOR IMMEDIATE RELEASE - SEPTEMBER 20, 1999
Contact: John T. Still III (JPC Investor Relations) 336-691-3382
Michael J. Burney (JPC Media Relations) 336-691-3313
William L. Bauhard - Diane T. Kohout (Guarantee Life
IR/Communications) 402-361-2848
Jefferson-Pilot Corporation (JP-NYSE) and The Guarantee Life Companies Inc.
(Nasdaq: GUAR) announced today that they have signed a definitive agreement for
Jefferson-Pilot Corporation to acquire The Guarantee Life Companies Inc. The
agreement provides for a purchase price of $32.00 per share of Guarantee Life
common stock. The acquisition price will be payable 50 percent in common stock
of Jefferson-Pilot and 50 percent in cash, with a provision that the purchase
price will convert to all cash if Jefferson-Pilot stock trades shortly before
closing at an average price above $75.00 per share or, at Jefferson-Pilot's
option, if the average price is below $65.00 per share.
Closing is targeted for completion by mid-December 1999.
Guarantee Life derives most of its earnings from a portfolio of individual life
insurance and annuity products marketed to middle-income individuals and small
business owners. Premiums and reserves of $125 million and $1.2 billion,
respectively, represent an increase of approximately 9 percent in Jefferson-
Pilot's Individual operations on a proforma basis. Guarantee Life also provides
employee benefit products, primarily group life insurance and group disability
insurance, marketed to small- and medium-sized employee groups. Group life and
disability premiums of $148 million represent an increase of approximately 150
percent in Jefferson-Pilot's book of business.
Jefferson-Pilot's group life and disability insurance operations will be
strengthened further by Guarantee Life's systems, underwriting, and claims
management capabilities. The acquisition also will provide an enhanced platform
for worksite marketing of life insurance products.
The transaction is expected to be accretive to Jefferson-Pilot's earnings per
share.
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Closing of the transaction is subject to several conditions, including the
approval of the shareholders of Guarantee Life, receipt of all appropriate
regulatory approvals, and the effectiveness of a registration statement to be
filed with the Securities and Exchange Commission covering the Jefferson-Pilot
shares that may be issued in the transaction. Shareholders of Guarantee Life
will be provided a proxy statement describing the terms of the transaction prior
to being asked to vote on the transaction at a special meeting of the
shareholders, which is expected to take place in December 1999.
Jefferson-Pilot Corporation Chairman and Chief Executive Officer David A.
Stonecipher described the agreement to acquire Guarantee Life Companies: "The
combination of Guarantee Life's businesses with Jefferson-Pilot's represents an
attractive opportunity for us, both financially and strategically. Our
individual life insurance businesses fit together extremely well, and we believe
that the merger of the two companies' group insurance operations will enable us
to take Jefferson-Pilot's group life and disability businesses to a higher level
of growth and profitability. We are also pleased that Robert D. Bates, CEO of
Guarantee Life, has elected to continue to lead all Group Insurance operations
for Jefferson-Pilot from Omaha."
Robert D. Bates, Chairman and Chief Executive Officer of Guarantee Life,
commented, "We are optimistic about the opportunity to affiliate with a company
having the financial strength and quality reputation of Jefferson-Pilot. Also,
we are pleased with the shareholder value that has been created since our
demutualization in 1995. We look forward to becoming a part of the Jefferson-
Pilot team."
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Jefferson-Pilot Corporation is a holding company whose stock is traded on the
New York Stock Exchange. Its life insurance and annuity companies, principally
Jefferson-Pilot Life, Jefferson Pilot Financial Insurance Company and Alexander
Hamilton Life, together offer full lines of individual and group life insurance
and annuity products. Their products are marketed through a national network of
both career and independent agents. An additional subsidiary, Jefferson-Pilot
Communications Company, owns and operates three network television stations, 17
radio stations, and produces and syndicates sports programming.
http://www.jpfinancial.com
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Jefferson-Pilot Corporation
Guarantee Life Acquisition Fact Sheet
I. Transaction
* $32.00 per Guarantee Life common share, payable 50 percent in common
stock of Jefferson-Pilot and 50 percent in cash. The purchase price will
convert to all cash if Jefferson-Pilot stock is trading at an average price
shortly before closing above $75.00 or, at Jefferson-Pilot's option, if the
average price is below $65.00.
* Jefferson-Pilot plans to effect, over time, open-market purchases of
its common stock to the extent shares are delivered to Guarantee Life
shareholders.
* Aggregate consideration is $411 million. That amount includes the
purchase of 9.25 million shares of Guarantee Life stock at $32.00 per share,
and the assumption of debt, currently $115 million.
* Pricing multiples:
* 1.4x Guarantee Life's GAAP book value as of June 30, 1999.
* Adjusted P/E of approximately 9-10x Guarantee Life's current
operating earnings plus expected expense synergies.
* Represents a financial purchase strategy to augment profits in
Jefferson-Pilot's core individual life insurance business, and a strategic
enhancement of Jefferson-Pilot's group life and disability insurance
operations.
II. Financing
* Cash needed to effect the transaction and stock repurchases will be
derived from approximately equal amounts of borrowings and proceeds of
securities sales.
* Expected after-tax cost of financing is less than 5%, including
projected debt expense and loss of income on securities sold.
III. Strategic Business Rationale
* Deploys over $400 million of excess capital at substantially
improved returns.
* Integration of the companies' individual life insurance businesses
provides opportunities to employ Jefferson-Pilot's proven expense management
capability to achieve significant economies of operation.
* Guarantee Life's group operations provide opportunities to
strengthen Jefferson-Pilot's group life insurance and group disability
insurance businesses through Guarantee Life's national sales force and
strong systems capabilities. Additionally, the acquisition provides
Jefferson-Pilot with an effective platform for worksite marketing of life
insurance products.
IV. Financial Impact
* Jefferson-Pilot expects annual accretion to reach a minimum range of
$0.15-$0.20 per share as synergies are achieved over the next three years.
* Annual corporate-wide expense savings expected to reach $30 million
pretax when fully developed over the next three years.
* Jefferson-Pilot's financial flexibility will remain substantial:
* Leverage and RBC ratios will remain consistent with
Jefferson-Pilot's current top level ratings.
* Company will retain significant future acquisition financing
capability.
The private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information contained
herein or in any other written or oral statements made by or on behalf of JP
are or may be viewed as forward looking. Although the Company has used
appropriate care in developing any such forward looking information, forward
looking information involves risks and uncertainties that could
significantly impact actual results. These risks and uncertainties include,
but are not limited to, the matters discussed in "Year 2000 Issue", "Market
Risk Exposures", "External Trends and Forward Looking Information" and other
risks detailed from time to time in the Company's SEC filings; to the risks
that JP might fail to successfully complete strategies for cost reductions
and for growth in sales of products through all distribution channels, in
general or related to acquisitions; to business interruption risks if the
Company or a critical business partner does not timely complete its Year
2000 compliance project; and more generally to: general economic conditions;
competitive factors, including pricing pressures, technological
developments, new product offerings and the emergence of new competitors;
interest rate trends and fluctuations and changes in stock markets; and
changes in federal and state laws and regulations, including, without
limitation, changes in financial services industry or tax laws and
regulations. The Company undertakes no obligation to publicly update or
revise any forward looking statements, whether as a result of new
information, future developments or otherwise.
(b) In connection with the approval of the Agreement and Plan of Merger
(described in paragraph (a) above), The Guarantee Life Companies Inc. Board of
Directors amended the Rights Agreement, dated November 18, 1996, between The
Guarantee Life Companies Inc. and ChaseMellon Shareholder Services, L.L.C. A
copy of the amendments to the Rights Agreement is attached hereto as Exhibit 4.
Item 7. Exhibits.
The following exhibits are filed as part of this Current Report on Form
8-K:
Exhibit Number Exhibit
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4 Amendment No. 1, dated as of September 19, 1999, to the Rights
Agreement, dated November 18, 1996, between The Guarantee Life
Companies Inc. and ChaseMellon Shareholder Services, L.L.C.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE GUARANTEE LIFE COMPANIES INC.
By /s/ Richard A. Spellman
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Richard A. Spellman, Senior Vice President,
General Counsel and Secretary
September 20, 1999
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EXHIBIT 4
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
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This Amendment (the "Amendment"), dated as of September 19, 1999, is
entered into by and between The Guarantee Life Companies Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have entered into a Rights
Agreement, dated as of November 18, 1996 (the "Agreement");
WHEREAS, the Company wishes to amend the Agreement;
WHEREAS, Section 26 of the Agreement provides, among other things, that
prior to the Stock Acquisition Time the Company may, by resolution of its Board
of Directors, and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of the Agreement without the approval of any holders of
Rights; and
WHEREAS, the Board of Directors of the Company has approved this
Amendment and the Company has directed the Rights Agent to amend the Agreement
as provided herein;
NOW, THEREFORE, the Company and the Rights Agent hereby amend the
Agreement as follows:
1. Capitalized terms used in this Amendment without definition shall have
the meanings given to them in the Agreement.
2. Section 1(a) of the Agreement is amended to add the following sentence
to the end thereof:
"Notwithstanding anything in this Agreement to the contrary, neither
Jefferson-Pilot Corporation ("Parent") nor LG Merger Corporation ("Newco")
shall be deemed to be an Acquiring Person as a result of the execution and
delivery of and performance of its obligations under, or consummation of
any one or more transactions (each, a "Permitted Event" and collectively, the
"Permitted Events"), contemplated by the Agreement and Plan of Merger, dated
as of September 19, 1999, as the same may be amended from time to time (the
"Merger Agreement"), by and among the Company, Parent and Newco, pursuant to
which the Company will be merged (the "Merger") with Newco."
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3. Section 1(gg) is amended to add the following sentence at the end
thereof:
"Notwithstanding anything in this Agreement to the contrary, the
acquisition of Beneficial Ownership of Common Stock of the Company pursuant
to the Merger and the consummation of any one or more of the Permitted Events
shall not constitute or result in the occurrence of a Stock Acquisition
Time."
4. Section 3(a) of the Agreement is amended to add the following language
at the end of the first sentence thereof immediately prior to the period:
"; provided, however, that, notwithstanding anything in this Agreement to
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the contrary, the acquisition of Beneficial Ownership of Common Stock of the
Company pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Distribution Date"
5. Section 7(a) of the Agreement is amended by (a) deleting the word "or"
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at the end of clause (iii) thereof, and (b) adding the following clause
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immediately following clause (iv) thereof and prior to the parenthetical phrase:
"or (v) the time immediately prior to the Effective Time (as such term is
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defined in the Merger Agreement) for which notice of such time has been
given by the Company to the Rights Agent as promptly as practicable prior
to such Effective Time, provided, however, that if the Merger
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contemplated by the Merger Agreement does not occur and the Merger
Agreement is terminated, the Rights will remain exercisable until the
earliest of (i), (ii), (iii) or (iv) above, no Expiration Date shall be
deemed to have occurred as a result of this clause (v)"
6. Section 11(a)(ii) of the Agreement is amended to add the following at
the end of the first sentence thereof immediately prior to the period:
"; provided, however, that, notwithstanding anything in this Agreement to
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the contrary, the acquisition of Beneficial Ownership of Common Stock of the
Company pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Section 11(a)(ii) Event"
7. Section 13(a) of the Agreement is amended to add the following at the
end thereof immediately prior to the period:
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"; provided, however, that, notwithstanding anything in this Agreement to
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the contrary, the acquisition of Beneficial Ownership of Common Stock of the
Company pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Section 13 Event"
8. The term "Agreement" as used in the Agreement shall be deemed to refer
to the Agreement as amended hereby.
9. This Amendment shall be governed by and constructed in accordance with
the laws of the State of Delaware.
10. This Amendment shall be effective as of the date first above
written, and, except as set forth herein, the Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
11. This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first above written.
THE GUARANTEE LIFE COMPANIES INC.
By: /s/ Robert D. Bates
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Name: Robert D. Bates
Title: President and Chief Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Jane A. Marten
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Name: Jane A. Marten
Title: Asst. Vice President
