Intact Financial has announced the US$1.7 billion purchase of US-based insurer OneBeacon Insurance Group to create a specialty insurer focused on small- and mid-sized businesses.
The resulting North American insurance provider will have over $2 billion in specialty lines premiums.
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A release said that the transaction bolsters Intact’s existing Canadian business with new products and cross-border capabilities.
Under the terms of the all-cash transaction, OneBeacon shareholders will receive US$18.10 cash per common share – a 14% premium based on the company’s closing stock price on the NYSE of US$15.89 (as of May 1, 2017) and a 15% premium to the volume weighted average price over the last 30 days. This represents an aggregate cash consideration of about $2.3 billion.
In addition to the terms above, OneBeacon’s debt of approximately US$275 million will remain outstanding following the transaction.
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Reuters reported that Intact plans to finance the deal and related expenses using equity financing, excess capital, and approximately $1 billion of financing (consisting of loans, notes, and preferred shares).
Serving as financial adviser for Intact on the deal is Goldman Sachs. Credit Suisse is advising OneBeacon.
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