Note to readers: The following information was filed with the Securities and Exchange Commission regarding the sale of Safeco Corp. to Liberty Mutual Group.
“You know, sometimes I say that all you have to do is come into work in the morning and something will happen. Life is sort of mysterious. So today, obviously, it’s a very different landscape than it was when everybody left yesterday because this morning we announced the merger of our company with Liberty Mutual in a deal that is valued at $68.25 a share. It’s a major transaction. One that has enormous implications for all of us.
“I came in and I found on my desk this piece that was written by H.K. Dent in 1956. He was a great one to write these epistles and hand them out to employees, but the question he asks in this particular piece is, “Am I going with an aggressive, progressive company, and am I doing my best with that company?” And that’s the question each of us has to ask every day. Over the last number of months, as we saw our performance in terms of actual sales and quality of the business overall improve and yet see nothing in our share price, we did have to ask ourselves if we were doing everything we could do for our company.
“And so after a lot of soul searching with the board of directors and many discussions over a long period of time we made the very difficult decision that it wasn’t right for Safeco to go it alone anymore. We, in fact, needed to join up with a global player, and Liberty Mutual is that player. You’ll hear a lot more about that later today. For those of you who are Seattle-based, there will be a meeting in the convention center today at 11 a.m. Pacific Daylight Time, and for those of you not in Seattle but at your desk or where you can call in, there is both a dial-in number and Webcast of that meeting so you can hear more details.
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“It’s obviously a historic day for the company and one that all of us have mixed emotions about, but we have to be prepared to be adaptive and agile and change and we need to grow. I think our transaction with Liberty Mutual will give us all of the strengths to have great next chapter with our business.”
What exactly happened?
Liberty Mutual Group and Safeco today announced that they have entered into an agreement under which Liberty Mutual will acquire all outstanding shares of common stock of Safeco for $68.25 per share in cash. The per-share stock price represents a 51 percent premium to the price at which our stock was trading before we made the announcement.
What happens next for Safeco?
Liberty Mutual’s agreement to acquire Safeco is subject to approval by Safeco’s shareholders, as well as customary regulatory approvals and conditions. Safeco is expected to formally become a part of the Liberty Mutual Group in the third quarter of 2008.
What should we do until then?
It’s business as usual at Safeco. We need to continue serving our customers and working with agents to bring on new ones. We’ll continue executing on our business plan and working toward achieving our goals. And during the next four to six months, the two companies’ senior leadership teams will partner to identify the most effective ways to integrate the two companies.
Does this agreement mean Safeco employees automatically lose their jobs?
No. First, it’s business as usual for the next four to six months. Liberty Mutual recognizes our employees as a key asset.
What happens to us and our offices after the deal closes?
During the approval process employee meetings will be conducted at both organizations, and a transition team will be formed consisting of strategic leadership from Safeco and Liberty Mutual. This team will plan for the organization’s post-closing strategy and operating structure. We will, as always, inform employees, agents and policyholders of decisions we make as soon as possible.
What will happen to my salary and benefits?
The intent is to maintain a benefits and compensation program at least as favorable, in general, as Safeco’s current benefits and compensation program for the two years following the completion of the transaction. Like Safeco, Liberty Mutual embraces a culture where we treat customers, and each other, with dignity and respect and we remain true to our mission of “helping people live safer, more secure lives.”
What about my bonus?
Bonuses will be paid (at each employee’s target level) shortly after the transaction closes. They’ll be prorated based on the time of year the deal closes. For instance, if you are at a 6 percent bonus target and the deal closes Sept. 30, your bonus would be 4.5 percent.
What happens to our equity awards?
Equity awards will fully vest upon change of control as a result of the transaction. Equity awards will be settled in cash at $68.25 per share shortly after Liberty Mutual’s acquisition of Safeco is completed. As we get closer to that date, more information will be available.
Will ‘Safeco’ exist after the deal closes?
Liberty Mutual intends to maintain the Safeco name and brand after the transaction closes, as it has done with other agency-focused companies that it has acquired over the years.
How does Safeco fit into Liberty Mutual’s organization?
The addition of Safeco will double the size of Liberty Mutual Group’s Agency Markets business unit, which is their independent agency organization. Liberty Mutual Agency Markets had revenues of $5.6 billion in 2007. Combined, the organization will have more than 15,000 independent agencies and will be the fifth-largest property & casualty insurer in the United States.
What will happen to Safeco Field?
It will continue to be called Safeco Field.
We know that you have many more questions that deserve answers. In coming weeks, we will begin regular updates to all employees regarding transition plans. Thank you for your patience.