When a major employer in a city is acquired by an outside buyer, the transaction can have one of two effects: The buyer can opt to lay off workers or relocate the company entirely, thus gutting the city’s workforce, or the buyer can opt to keep operations largely intact, thus retaining jobs and providing a jolt of capital.
Sumitomo Life’s agreement to purchase Symetra Financial, announced Tuesday morning, seems to fall in the latter category. The Japanese insurance giant plans to spend $3.8 billion on Symetra to establish a U.S. foothold, and in doing so it will keep Symetra’s management team, employee base, and Bellevue headquarters intact. Operations will inevitably change to fit the new owner’s standards, but Bellevue will keep the jobs and the building in downtown.
“This transaction will bring compelling strategic and financial benefits for Symetra, including providing a substantial cash premium to our shareholders,” Symetra CEO Thomas Marra said in a statement, noting shareholders will receive $32 per share plus a 50-cent dividend. Symetra shares closed at $29.51 yesterday and are up more than 7 percent today.
“Our vision and long-term plans for building Symetra into a national player are unchanged. We will be positioned better than ever to successfully execute on these plans,” Marra said in the statement. Symetra declined the opportunity to comment for this story.
The Symetra purchase mirror’s SAP’s $8.3 billion acquisition of Concur Technologies. Overall, these transactions look good for the Eastside — homegrown companies are being purchased by international giants. Sure, the Eastside loses headquarters, but Symetra will, as Concur does, operate under its own brand, and the added financial security that comes with the backing of a large company makes the area economy less volatile.
But Symetra is the latest in a trend that’s beginning to emerge. It and Concur were acquired, and other legacy Eastside companies — namely Eddie Bauer and T-Mobile US — are consistently mentioned in merger talks. Other area companies — think Apptio — are becoming powerhouses in specialized areas of information technology, which make them ripe acquisition targets for larger companies with broader ambitions.
Couple that with Expedia’s impending departure for Seattle and Valve’s reported openness to leaving, and it’s possible that the Eastside could slowly be losing headquarters. There is ample evidence to the contrary; Paccar is firmly established in Bellevue, and Microsoft’s Eastside headquarters are nothing to scoff at. But Expedia’s growth ambitions are leading it away from Bellevue, and other companies that want to grow without relying on an acquisition could do the same. As for those getting purchased, the Eastside could turn into an area filled with (very, very large) satellite offices.
That fate wouldn’t spell doom for the Eastside in any means; in fact, having numerous successful companies with significant operations in a city could help insulate that city from the fluctuations that can hit flagship companies. But satellite offices don’t put city names in the general public’s lexicon, nor do they completely revamp an area (see Amazon, South Lake Union).
Those who want to see an Eastside with numerous well-paying jobs and financial stability can be happy with the Symetra deal. Symetra, which had $34 billion in assets at the end of June, now can play with Sumitomo’s $229 billion. Those who want the region to continue producing and retaining big companies headquartered here might want to take note, though; acquisitions don’t always have rosy outcomes.