Writing about Chubb (NYSE:CB) earlier this week, I said that I thought it was pretty likely that Chubb was going to turn to M&A to build the business further, with exposure to small-/medium-sized commercial clients being a prime target. Three days later, Chubb announced an unsolicited bid for Hartford Financial Services (HIG) ("Hartford").
Although initial reaction to the bid hasn't been universally positive for Chubb, I don't think it's a bad deal. In fact, I see it as a highly accretive deal, and I think Hartford will try to negotiate a higher price and see that a bit more of that accretion is "shared" with Hartford shareholders. The market would seem to think so too, as Hartford shares already trade above the proposed deal price.
I do think that Hartford is a good target for Chubb and I do think that Chubb can afford to pay more and still achieve worthwhile synergies. How far investors want to push their luck, and whether investing today in pursuit of a higher price makes sense, is up to them, but I would note that I would have previously said that $65 was a good fair value for Hartford on a standalone basis.
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