Assurant to acquire Warranty Group in $2.5B transaction
Assurant (AIZ) and The Warranty Group, a leading global provider of protection plans and related programs, and a portfolio company of TPG Capital, announced that they have entered into a definitive agreement to combine operations, with Assurant shareholders retaining majority ownership of the combined company.
The transaction is valued at approximately $2.5B and is expected to close in the first half of 2018, subject to shareholder and regulatory approvals, and other customary closing conditions.
The transaction will significantly advance Assurant’s strategy in the global lifestyle market with an attractive product and client portfolio, diversified growth profile and a deeper global footprint.
With annualized revenue greater than $1B as of June 30, 2017, The Warranty Group will enhance Assurant’s scale and market presence in its vehicle protection, extended service contracts and financial services businesses across 35 countries.
The resulting geographic footprint also will provide resources to accelerate Assurant’s mobile strategy in key markets such as Asia-Pacific.
The Warranty Group’s U.S. vehicle protection business also brings new client partnerships and distribution channels including dealer networks and national accounts, and positions Assurant to capitalize on emerging trends in the auto market such as digital auto retailers.
The transaction values The Warranty Group at $1.9 billion in equity value, or $2.5 billion of enterprise value, including their existing debt.
Under the transaction agreement, Assurant, Inc. will become a wholly owned subsidiary of TWG Holdings Limited, whose name will be changed to Assurant Ltd. Assurant shareholders will own approximately 77 percent of the combined entity as existing Assurant, Inc. shares are converted into shares of Assurant Ltd. on a one-for-one basis.
TPG and its affiliates will own the remaining 23 percent, equal in value to 16 million Assurant shares, or approximately $1.5 billion at yesterday’s closing price. Assurant will also pay approximately $372 million in cash to TPG.
Upon closing, Assurant Ltd. shares will trade on the New York Stock Exchange under the ticker symbol AIZ.
The senior management team of Assurant will lead the combined organization.
Assurant intends to finance the cash consideration and repayment of approximately $591 million of The Warranty Group’s existing debt through new debt, and preferred securities expected to be issued after closing.
Assurant has entered into a commitment letter for a $1.0 billion bridge facility. The transaction is expected to be modestly accretive to Assurant’s 2018 operating earnings per share on a run-rate basis.
By the end of 2019, Assurant expects to generate $60 million of pre-tax operating synergies by optimizing global operations.
To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.