Willis Group Holdings Limited and the original family shareholders of French insurance broker Gras Savoye & Cie. announced that they have signed a definitive agreement with Astorg Partners, a private equity fund, to reorganize the capital of Gras Savoye in a leveraged transaction.
The deal is expected to close in the fourth quarter of 2009, subject to customary approvals and completion of financing.
“Gras Savoye has been an Associate company of Willis since 1997 when Willis acquired a 33 percent ownership interest,” the bulletin explained. “Since then, Willis has gradually increased its shareholding to 48.6 percent of voting rights (46.2 percent of outstanding shares). The family shareholders and management currently own 51.4 percent of the voting shares of Gras Savoye.
“Under the terms of the transaction, Astorg Partners will acquire 33.3 percent of the voting rights (31.8 percent of outstanding shares) of a new holding company while Willis and the family shareholders will sell part of their stakes in Gras Savoye to Astorg Partners and roll over their remaining shares into the new holding company, through a combination of equity, convertible debt and seller financing.
“Willis, the family shareholders of Gras Savoye, and Astorg will hold equal stakes of 31.8 percent in the new holding company and have equal representation of 33.3 percent of the voting rights on its Board. The remaining 4.5 percent will be held by a large pool of Gras Savoye managers.”
Willis said the terms of the deal value its existing investment in Gras Savoye at approximately $343 million. As the transaction proceeds, Willis said it “will roll over approximately $135 million in equity and convertible debt and lend approximately $48 million to the new holding company at a rate of 6 percent per annum. Willis expects to generate approximately $160 million of tax-free net cash proceeds from the transaction, which it will use to pay down existing debt.”
In addition Willis noted that the agreement also gives the Company “the option to purchase 100 percent of the capital in the new holding company in 2015, should it choose to do so, with notification in 2014. An existing put option, which gave family shareholders an option to sell their shares in Gras Savoye to Willis between now and 2011, will be cancelled at the closing of the transaction.”
Chairman and CEO Joe Plumeri indicated that Willis “looks forward to building on the strong and valuable relationship we have established with Gras Savoye over the past 12 years, and we remain fully committed to our partnership. This new arrangement enhances Willis’ financial flexibility, while at the same time, engaging an important new strategic partner in its Gras Savoye investment.”
Patrick Lucas, who will continue to head Gras Savoye as Chairman and CEO, described the new ownership structure as allowing “everyone at Gras Savoye to be connected even more closely with the success of our business.”
Christian Couturier, a Partner at Astorg Partners, expressed his satisfaction with the deal, and indicated that under Lucas’ leadership and “with the personal investment of a large number of Gras Savoye managers and employees,” as well as the support of Willis and “Astorg’s track record as a proactive shareholder in family companies,” it would “create the conditions for success in the next five years.”
Willis will hold a teleconference call and web cast, today Thursday, November 19, 2009, at 8:00 A.M. Eastern Time, featuring Plumeri.
The web cast and presentation materials will be available in the “Investor Relations” section of the Willis website at: www.willis.com. To dial in to the live teleconference, please call (866) 803-2143 (domestic) or +1 (210) 795-1098 (international), with a pass code of “Willis.” Media and individuals will be in a listen-only mode. Participants are asked to call in a few minutes prior to the call in order to register for the event. A replay of the call will be available through December 19, 2009 at 10:59 PM Eastern Time, by calling (800) 754-7904 (domestic) or + 1 (203) 369-3332 (international) with no pass code, or by accessing the web site.
Source: Willis Group Holdings