UPDATE: Liberty Mutual to Acquire Safeco for $6.2B

Liberty Mutual Group and Safeco Corporation announced that they have entered into a definitive agreement pursuant to which Liberty Mutual will acquire all outstanding shares of common stock of Safeco for $68.25 per share in cash.

The proposed transaction, which is valued at approximately $6.2 billion, has been approved by the Boards of Directors of both companies. It is subject to approval by Safeco’s shareholders as well as the customary regulatory approvals and conditions. The transaction is expected to close by the end of the third quarter of 2008. The transaction is not subject to financing contingencies.

Upon completion of the transaction, Liberty Mutual will become the fifth largest property and casualty insurer in the United States. Currently, Liberty Mutual Group is the sixth largest property and casualty insurer in the United States based on the company’s 2007 direct written premium of $20.2 billion, while Safeco had 2007 direct written premium of $5.9 billion.

Following the transaction, Safeco will become part of Liberty Mutual Group’s Agency Markets business unit. Liberty Mutual Agency Markets had revenues of $5.6 billion in 2007. Combined, the organization will have about 15,000 independent agencies.