Japan Post to buy 7 percent of U.S. insurer Aflac

(Reuters) - Japan Post Holdings Co Ltd 6178.T on Wednesday said it will buy 7 percent of U.S. insurer Aflac Inc AFL.N for about $2.4 billion, as the postal and financial conglomerate seeks new profit-drivers to counter weak growth prospects.

Japan Post's logo is seen at its headquarters in Tokyo, Japan, January 30, 2017. REUTERS/Kim Kyung-Hoon

Japan Post, majority-owned by the government, will acquire the stake in Georgia-based Aflac through open market or private block purchases, the companies said in separate statements.

Without buying any additional shares, Japan Post’s stake will grow to 20 percent in terms of voting rights after four years in accordance with shareholder rights given by Aflac, the companies said.

In accounting rules, Japan Post would be able to book Aflac’s profit as its own in proportion to its stake when it holds 20 percent or more.

“Aflac’s growth will contribute to Japan Post’s profit,” Japan Post Chief Executive Masatsugu Nagato said at a news conference.

Known for the Aflac Duck character, the U.S. company garners 70 percent of its revenue from its Japan business, where it is the oldest and biggest cancer-insurance provider.

The two companies already have a tie-up agreement that allows Aflac to sell its cancer insurance policies at post offices across Japan.

Japan Post, about 57 percent government held, owns Japan Post Bank Co Ltd 7182.T and Japan Post Insurance Co Ltd 7181.T, in addition to its mail delivery business with 24,000 post offices nationwide.

With almost all of its profit coming from the financial units, Japan Post has been struggling to find new businesses that can become growth drivers.

The purchase is Japan Post’s second multi-billion bet after the $4.9 billion acquisition of Australian logistics company Toll Holdings Ltd in 2015. It had to write down the bulk of Toll’s value only two years after the deal due to its weak performance.

Reporting by Taiga Uranaka; Editing by Christopher Cushing