Intuit Inc. and InsWeb Corp. today announced they have reached a set of definitive agreements to allow InsWeb to acquire certain assets in exchange for an equity stake. Under the agreements, InsWeb will acquire selected assets of Intuit’s QuickenInsurance business. In exchange, Intuit will receive a 16.6 percent post-closing equity stake in InsWeb.
Based on the closing price of InsWeb’s stock on Nov. 24, 2000, and the number of shares expected to be received, the equity value of the transaction is expected to be approximately $14 million. In addition, under a separate five-year agreement, InsWeb will become the exclusive consumer insurance aggregator for Intuit’s Quicken.com and QuickenInsurance Web sites and certain consumer desktop products.
In exchange, Intuit will share in associated revenues, which are subject to certain minimums. Also, Intuit has agreed to work to transition its relationships with its online distribution sources to InsWeb.
“The sale of our consumer online insurance business is consistent with our strategy to focus our resources on businesses where we have a sustainable competitive advantage or are on a path to achieve one,” said Steve Bennett, Intuit’s president and chief executive officer. “We think these agreements are a win for Intuit, for InsWeb and for consumers. We believe that by acquiring Intuit’s consumer insurance business, InsWeb will gain additional brand recognition and leverage needed to succeed in the online insurance space — and we think Intuit’s customers will win with InsWeb’s solutions.”
Under the agreements, all consumer insurance aggregator services and support promoted on Intuit’s Quicken.com and QuickenInsurance.com consumer channels will be provided through InsWeb, and Intuit agrees to refrain from performing such services on behalf of individuals in the U.S. for a period of five years. Intuit plans to cease the online operations of its QuickenInsurance business, which are operated by its Intuit Insurance Services, Inc. subsidiary in Alexandria, Va.
Approximately 75 Intuit employees will be impacted by this closing, some of whom may be offered positions at InsWeb or in other Intuit businesses. Upon the closing of the agreements, it is expected that Steve Bennett, Intuit’s president and chief executive officer, will be elected to the InsWeb Board of Directors. However, in connection with its receipt of the 16.6 percent post-closing equity stake in InsWeb, Intuit will agree to certain conditions, including restrictions on resale of such shares for a period of at least 18 months and on the ability of Intuit to vote its InsWeb shares and to acquire additional shares.
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