Heritage Insurance Holdings Inc., a Clearwater, Fla.-headquartered property and casualty insurance holding company, has signed a definitive agreement to acquire NBIC Holdings Inc., the parent company of Narragansett Bay Insurance Company (NBIC). NBIC is a Rhode Island-headquartered specialty underwriter of personal residential insurance products and services in states along the Eastern seaboard.
The purchase price for the acquisition will be $250 million, subject to post-closing adjustments. The acquisition will be financed with $210 million in cash and $40 million of Heritage’s common stock.
The cash component of the consideration will be financed, in part, with cash on hand, including proceeds from Heritage’s senior secured notes issued in December 2016. Heritage also intends to undertake, subject to market and other conditions, an offering of convertible senior notes coupled with a concurrent share repurchase.
The transaction has been unanimously approved by the boards of directors of both Heritage and NBIC. The parties expect the transaction to close as soon as the fourth quarter of 2017, subject to customary closing conditions including required regulatory approvals.
“Completing this acquisition is the next critical step in executing our geographic diversification strategy,” said Heritage Chairman and CEO Bruce Lucas in a company press release. “Post-transaction, we expect approximately 45% of our revenue to be generated outside of Florida, and Florida Tri-County personal lines policies will represent only approximately 7% of all total insured value, further hedging against assignment of benefits volatility.”
Lucas added in the release that Heritage will also look to capitalize on the opportunity to expand its commercial residential expertise in its current markets to the Northeast.
Citi is acting as exclusive financial advisor to Heritage, and Greenberg Traurig LLP is serving as legal counsel to Heritage in connection with the transaction. Evercore is acting as exclusive financial advisor to NBIC, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to NBIC in connection with the transaction.
Source: Heritage Insurance Holdings Inc.
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