Goldman Sachs, USI Holdings
Big insurance broker USI Holdings Corp. headquartered in Briarcliff Manor, N.Y., agreed to be acquired by GS Capital Partners, a private equity affiliate of Goldman, Sachs & Co., in a transaction valued at approximately $1.4 billion, including repayment of USI’s existing debt obligations.
The deal follows USI’s acknowledgement in October that it had received an inquiry from a private equity firm interested in acquiring all of the outstanding common stock of the company. In response, the company’s board of directors formed a special committee consisting of outside directors to review the proposal and consider all of the company’s options.
Under the terms of the GS Capital merger agreement, USI stockholders will receive $17.00 in cash for each share of USI common stock they hold, representing a premium of 20.5 percent to the average closing share price for the 30 calendar days prior to October 24, 2006, the day USI announced that it had formed the special committee.
GS Capital Partners Funds are part of the Goldman Sachs’ Principal Investment Area in the Merchant Banking Division. Goldman Sachs’ Principal Investment Area has formed 12 investment vehicles aggregating $35 billion of capital to date.
Aon, Footman James
Chicago-based Aon Corp. completed the acquisition of Footman James from Alchemy Partners Limited based in Guernsey. The terms of the transaction are not disclosed.
The transaction will have no effect on existing policies in force and client service will continue uninterrupted. Aon said that Footman James will continue to trade under its own name for the foreseeable future.
Aon Corp. provides risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting.
Arthur J. Gallagher, Lowndes Lambert
Arthur J. Gallagher and Co. signed a definitive agreement to acquire the Lowndes Lambert Group Canada Ltd., headquartered in Toronto, Ontario. Terms of the transaction were not disclosed. The transaction is expected to close mid-February, 2007.
With a 50 year history, Lowndes Lambert Group Canada, Ltd. is a Canadian property/casualty retail insurance broker offering risk management, commercial, and personal lines insurance services to their North American client base.
The firm also specializes in insurance products for transportation, hospitality and pharmaceutical businesses. Philip G. Kane and his associates will continue to operate from their eight Canadian locations under the direction of James S. Gault, president of Gallagher’s Brokerage Services Division -Retail.
Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm, is headquartered in Itasca, Ill., has operations in seven countries and does business in 120 countries.
AIG, 21st Century
American International Group Inc. submitted a letter to the board of directors of 21st Century Insurance Group proposing to acquire the outstanding 38.1 percent publicly held shares of 21st Century for $19.75 per share in cash.
AIG and its subsidiaries own approximately 61.9 percent of the outstanding shares of 21st Century. The aggregate cash consideration payable would be approximately $690 million. Following the transaction, 21st Century would become a wholly owned subsidiary of AIG.
The proposed per share price represents a 25.5 percent premium to the average closing price during the last 12 months. The proposed per share price also represents a multiple of 19.6x the consensus estimates of 21st Century’s 2007 earnings per share (based on a current First Call estimate of $1.01 per share).
AIG has advised 21st Century that AIG’s sole interest is in acquiring the remaining shares of 21st Century held by the public shareholders and that it has no interest in a disposition of its controlling equity stake in 21st Century.
Canada’s Kingsway Financial Services Inc. agreed to acquire Mendota Insurance Co., a wholly owned subsidiary of The St. Paul Travelers Companies Inc. The transaction includes Mendota’s wholly owned subsidiaries, Mendakota Insurance Co. and Mendota Insurance Agency Inc. The transaction is scheduled to be completed following regulatory approvals. Terms of the transaction were not disclosed.
The Toronto-based company said the purchase price will be funded through internal sources, a portion of which may include Kingsway’s existing undrawn credit facilities.
Ebix Inc. made a proposal to acquire all of the outstanding common stock of Docucorp International Inc. for $11 per Docucorp share in cash and Ebix stock or a total equity value of approximately $140 million. The offer represents a 10.2 percent premium on the proposed merger offer price given by Skywire Software and a 33 percent premium to the six months average closing price for Docucorp’s common stock.
Ebix believes that the combination of Ebix and Docucorp would create a combined company with earnings per share of $ 2.00 or more and pro forma revenue of approximately $130 million. Ebix believes that the combined company can generate income after taxes of at least $16 million or more on an annualized basis.
Ebix proposed to pay for the transaction with $45 million in cash and $95 million in the form of 3,467,153 shares of newly registered Ebix stock, valued at $ 27.40 per share.
Kingsway, Robert Plan Renewal Rights
Toronto-based Kingsway Financial Services entered into an agreement to acquire the renewal rights of The Robert Plan Corporation’s assigned risk business.
As part of these arrangements, RPC was given the authority to market the assigned risk programs on behalf of Kingsway, and Kingsway has assumed certain operating functions related to this business,” said the bulletin. “RPC has also been granted an option for a limited period of time to repurchase these rights and acquire these operating functions from Kingsway.”
Kingsway is one of the largest truck insurers and non-standard automobile insurers in the U.S. and Canada.
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