The GEICO transaction is a big deal for GEICO.
For the first time, the company is being acquired by a new parent company with a history of making acquisitions.
The merger gives GEICO a $8.6 billion cash infusion and $2.3 billion in debt financing.
The deal is also a sign of how the merged company is trying to move away from a business model that was a major driver of its business and revenue.
GEICO is expected to report its fourth-quarter financial results in early March.
GEICP’s CEO, Andrew Cohen, will step down and the merged group will be known as GEICO Financial Services Pty Ltd.
The GEICO deal is a sign that the company has moved away from an expensive cash infusion into a cash-intensive business model.
This is not to say the company will continue to operate at a loss, just that its profitability is likely to rise in the near future.
This, in turn, is a welcome development for GEIC’s shareholders.
GEICS parent, the state-owned Bank of China, has been investing heavily in its business, investing in companies like BHP Billiton, GSK, Cargill and Chevron, among others.
GEICA’s share price has risen by about 40 per cent in the past year and the merger has brought a big influx of capital into the company.GEICO is also moving into the internet payment space, with an emphasis on mobile payments and in-store shopping.
The new company will be run by the new CEO, Anthony Giddens, who previously held the reins of the parent company.
Giddins will become CEO of GEICO and will also be the company’s Chief Financial Officer.
GEI will become the new Chief Financial Analyst, which will allow Gidds to focus on the financial performance of the company and help it navigate the merger.
The GEICA Financial Services Group will be formed to focus more on financial advice, while the GEICO Group will focus on customer services and other aspects of the business.
The merger will be announced at GEICO’s annual general meeting in February.