MetLife, the largest U.S. life insurer, agreed to buy Chilean pension manager AFP Provida from Banco Bilbao Vizcaya Argentaria in a deal valued at about $2 billion to add fee income in Latin America.
MetLife will conduct a public cash tender offer for all of the outstanding shares of Provida, MetLife said in a statement. BBVA has agreed to transfer its 64.3% stake to MetLife, according to the statement.
Chile’s economy is projected to expand by 4.5% this year, compared to U.S. growth estimated at 2%, according to economists’ estimates compiled by Bloomberg. Low interest rates and slow economic growth have weighed on results at MetLife.
With the acquisition of Provida, MetLife’s operating earnings from emerging markets are expected to grow to about 17% from 14% currently, according to the statement. The deal, which MetLife expects to complete in the third quarter, will boost earnings by 5 cents a share this year and by 15 cents in 2014, MetLife said.
BBVA has sought buyers for its pension fund assets in Chile, Mexico, Peru and Colombia this year as it attempts to recover from Spain’s real estate slump. It agreed in November to sell the Mexican operation to a group of local buyers for $1.6 billion.
MetLife follows Principal Financial Group in reaching a deal to acquire a manager of Chilean retirement funds. Principal Financial agreed in October to buy AFP Cuprum for about $1.5 billion, boosting fees from managing assets.
Provida, the largest pension fund manager in Chile, had about $45.3 billion under management as of Sept. 30, according to the statement. Chilean pension providers, called AFPs, manage a total of $160 billion in assets, according to the country’s pension regulator.