UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 6, 1997
Date of Report (Date of earliest event reported)
SAFECO CORPORATION
(Exact name of registrant as specified in Charter)
WASHINGTON 1-6563 91-0742146
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
SAFECO Plaza, Seattle, Washington 98185
(Address of principal executive offices) (Zip Code)
(206) 545-5000
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On June 6, 1997, SAFECO Corporation, a Washington corporation (the
"Company" or "SAFECO"), entered into an Agreement and Plan of Merger (the
"Merger Agreement"), by and among American States Financial Corporation, an
Indiana corporation ("ASFC"), SAFECO and ASFC Acquisition Co., an Indiana
corporation and a wholly owned subsidiary of SAFECO ("Merger Sub"). The
Merger Agreement provides for, among other things, the merger of Merger Sub
with and into ASFC (the "Merger"), with ASFC surviving the Merger as a wholly
owned subsidiary of SAFECO. Pursuant to the Merger Agreement and upon
consummation of the Merger, each outstanding share of common stock, no par
value (the "ASFC Common Stock"), of ASFC, will be converted into the right to
receive $47.00 in cash without interest thereon. In connection with the
Merger Agreement, SAFECO has agreed to pay approximately $100 million to
Lincoln National Corporation ("LNC"), an Indiana corporation and the holder
of approximately 83% of the outstanding AFSC Common Stock, in consideration
for LNC's agreement to release AFSC from certain debt obligations and to
repay a $200 million term loan from LNC.
Consummation of the Merger is subject to certain customary
conditions, including, among others, regulatory approval under applicable
state insurance laws and regulations and under the federal Hart-Scott-Rodino
Antitrust Improvements Act of 1976, and the approval of the holders of ASFC
Common Stock. The foregoing description of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement which is filed
as Exhibit 2.1 to this Form 8-K and incorporated herein by reference.
In connection with the Merger Agreement, the Company and LNC have
also entered into a Voting, Support and Indemnification Agreement, dated June
6, 1997 (the "Voting Agreement"), pursuant to which LNC agreed, among other
things, (i) to vote all ASFC Common Stock held by it or any of its
subsidiaries in favor of the Merger, (ii) to grant SAFECO an irrevocable
proxy in all ASFC Common Stock held by it or any of its subsidiaries for
purposes of a vote of ASFC Common Stock held to consider the Merger, and
(iii) to allocate between LNC and SAFECO certain tax and benefits liabilities
and assets of ASFC. The foregoing description of the Voting Agreement is
qualified in its entirety by reference to the Voting Agreement which is filed
as Exhibit 2.2 to this Form 8-K and incorporated herein by reference.
SAFECO intends to finance the Merger and the repayment of AFSC's
obligations to LNC through a combination of (a) approximately $657 million in
bank debt, (b) the issuance of approximately (i) $200 million of 10-year
senior notes (the "Notes"), (ii) $990 million of 40-year Company-obligated,
mandatorily redeemable preferred securities (the "Capital Securities") that are
callable after 10 years (net of underwriting compensation), and (iii) $675
million of SAFECO common stock (net of underwriting compensation), and (c) a
$600 million special dividend from its property and casualty subsidiaries. The
Company expects to issue the Notes and the Capital Securities before the end of
its second quarter or shortly thereafter, but does not expect to issue the
common stock until shortly after the effective time of the Merger.
The Company's assumptions as to the terms of the financings
proposed to be entered into in connection with the Merger are subject to
change due to fluctuations in market conditions, prevailing interest rates
and other factors. Certain portions of the Company's financing plan are not
expected to be consummated until later in 1997. The Company may determine to
offer other securities or pursue other forms of financing in lieu of certain
of the offerings or borrowings described above, or to increase or decrease
the individual amounts of such offerings and borrowings. While any such
changes to the Company's plan of financing are not expected to be
significant to the pro forma financial results, there can be no assurance
that significant changes will not be made in the future.
Neither the Notes nor the Capital Securities will be registered under
the Securities Act of 1933, as amended, and neither may be offered or sold
absent registration or an applicable exemption.
This notice does not constitute an offer to sell or the
solicitation of an offer to buy the Notes, the Capital Securities or the common
stock, nor will there be any sale of these securities in any state in which
such an offer, solicitation or sale would be unlawful before registration or
qualification under the securities laws of such state.
CERTAIN FORWARD-LOOKING INFORMATION
The "Unaudited Pro Forma Combined Condensed Financial Statements"
filed as Exhibit 99.2 hereto contain certain forward-looking information.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking information to encourage companies to provide
prospective information about themselves so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. The Company
identifies the following important factors which could cause actual results
to differ materially from any such results which might be projected,
forecast, estimated or budgeted by the Company in forward-looking
information. All of such factors are difficult to predict and many are beyond
the control of the Company. Accordingly, while the Company believes that the
assumptions underlying the forward-looking information are reasonable, there
can be no assurance that such assumptions will approximate actual experience.
These important factors include: (i) general economic conditions, changes in
interest rates and the performance of securities markets, each of which may
impact the profitability of the combined company, the market value of the
combined company's investment portfolio, the credit quality of the combined
company's loan portfolio, the demand for property and casualty insurance
and the ability of the Company to effect without change its financing plan in
connection with the Merger; (ii) regulatory developments affecting financial
institutions, generally, and property and casualty and life insurance
companies, specifically; (iii) industry consolidation and increased
competition; (iv) the impact on the combined company's property and casualty
insurance subsidiaries of catastrophes or natural peril losses, such as
losses caused by wind, hail, water and earthquakes, in significant numbers or
of significant magnitude; (v) the combined company's ability to control costs
and realize estimated cost savings; (vi) the integration of the Company's and
ASFC's operations in a timely and cost effective manner; and (vii) the
possibility that the Merger might not be consummated. Investors are also
directed to consider other risks and uncertainties discussed in documents
filed by the Company and ASFC with the Securities and Exchange Commission. The
Company disclaims any obligation to update forward-looking information,
including information provided in the "Unaudited Pro Forma Combined Condensed
Financial Statements" filed as Exhibit 99.2 hereto.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) The following exhibits are filed as part of this Report:
2.1 Agreement and Plan of Merger dated as of June 6, 1997 by and
among American States Financial Corporation, SAFECO Corporation
and ASFC Acquisition Co.
2.2 Voting, Support, and Indemnification Agreement, dated June 6,
1997, by and among SAFECO Corporation and Lincoln National
Corporation (incorporated by reference to the Corporation's
Schedule 13D filed on June 16, 1997)
23.1 Consent of Ernst & Young LLP, Independent Auditors
99.1 Press Release issued by SAFECO Corporation on June 9, 1997
99.2 Unaudited Pro Forma Combined Condensed Financial Statements of
SAFECO Corporation reflecting the proposed acquisition of
American States Financial Corporation and certain related
financings
99.3 Consolidated Balance Sheets of American States and Subsidiaries
as of December 31, 1996 and 1995, and the related Consolidated
Statements of Income, Shareholders' Equity and Cash Flows for
each of the three years in the period ended December 31, 1996,
together with the notes thereto and the related report of
Independent Accountants (incorporated herein by reference to
pages 34 to 57 of the American States Annual Report on Form
10-K for the year ended December 31, 1996 (Commission File
Number 001-11733))
99.4 Consolidated Balance Sheets of American States and
Subsidiaries as of March 31, 1997 and December 31, 1996, and the
related Consolidated Statements of Income, Shareholders' Equity
and Cash Flows for the Three Months Ended March 31, 1997 and 1996
(unaudited), together with the notes thereto (incorporated herein
by reference to pages 1 to 9 of the American States Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997
(Commission File Number 001-11733))
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SAFECO CORPORATION
Dated: June 24, 1997 By:/s/ Rod A. Pierson
---------------------------
Rod A. Pierson
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibits.
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2.1 Agreement and Plan of Merger dated as of June 6, 1997 by and
among American States Financial Corporation, SAFECO Corporation
and ASFC Acquisition Co.
2.2 Voting, Support, and Indemnification Agreement, dated June 6,
1997, by and among SAFECO Corporation and Lincoln National
Corporation (incorporated by reference to the Corporation's
Schedule 13D filed on June 16, 1997)
23.1 Consent of Ernst & Young LLP, Independent Auditors
99.1 Press Release issued by SAFECO Corporation on June 9, 1997
99.2 Unaudited Pro Forma Combined Condensed Financial Statements of
SAFECO Corporation reflecting the proposed acquisition of
American States Financial Corporation and certain related
financings
99.3 Consolidated Balance Sheets of American States and Subsidiaries
as of December 31, 1996 and 1995, and the related Consolidated
Statements of Income, Shareholders' Equity and Cash Flows for
each of the three years in the period ended December 31, 1996,
together with the notes thereto and the related report of
Independent Accountants (incorporated herein by reference to
pages 34 to 57 of the American States Annual Report on Form
10-K for the year ended December 31, 1996 (Commission File
Number 001-11733))
99.4 Consolidated Balance Sheets of American States and
Subsidiaries as of March 31, 1997 and December 31, 1996, and the
related Consolidated Statements of Income, Shareholders' Equity
and Cash Flows for the Three Months Ended March 31, 1997 and 1996
(unaudited), together with the notes thereto (incorporated herein
by reference to pages 1 to 9 of the American States Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997
(Commission File Number 001-11733))