Japan Post Holdings Co. Ltd. is looking to buy 7% to 8% of Aflac Inc. by the end of 2019 and will seek to make the U.S.-based insurer an affiliate four years later, Tokyo's The Nikkei reported, without citing sources.
The stake is expected to cost the Japanese company about ¥300 billion, according to the report. Because Japan Post remains majority government-owned, it will have to carry out the purchase through a trust bank to comply with U.S. rules.
Under Aflac's voting rights structure, shareholders that retain a stake for four years receive 10 votes per share instead of 1, which means that Japan Post's share of total voting rights will rise to 20% four years after it makes its investment. When that occurs, Japan Post plans to effectively become Aflac's largest single shareholder and will incorporate the U.S. company into its group structure, The Nikkei said.
Aflac in April converted its Japan branch to a subsidiary, Aflac Life Insurance Japan Ltd., which sells cancer insurance and other products in post offices through a long-standing alliance with Japan Post. Once the latter completes its investment, it aims to expand Aflac Life's cancer insurance offering and provide asset management services, as well as possibly co-investing at home and abroad, according to the report.
Aflac confirmed Dec. 13 that it was in talks with Japan Post regarding the potential minority investment, which it said would be carried out through open-market purchases. It said the discussions do not involve the U.S.-based company or "any of its subsidiaries" becoming part of the Japan Post group.
It also said there was no assurance that an agreement would be reached or that a transaction would occur, and it said it could offer no comment on the terms, timing or form of any potential transaction.
As of Dec. 12, US$1 was equivalent to ¥113.24.