Assurant to Buy The Warranty Group in $2.5 Billion Deal
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% of the combined company, while TPG and its affiliates will own the remaining 23%. The transaction is expected to close in the first half of 2018.
NEW YORK and CHICAGO — Risk management solutions provider Assurant, which provides vehicle service contracts through its Assurant Solutions business unit, has agreed to acquire The Warranty Group in a deal valued at $2.5 billion.
The Warranty Group, a unit of private equity firm TPG Capital, has annualized revenues of more than $1 billion. The acquisition is expected to enhance Assurant’s scale and market presence in its vehicle protection, extended service contracts, and financial services business across 35 countries. Officials said it also positions Assurant to capitalize on emerging trends in the automotive retail market, such as digital retailing.
“Assurants’s acquisition of The Warranty Group advances our position as a leading global provider in the vehicle protection business and aligns well with our lifestyle market growth strategy of helping consumers protect their appliances, autos, mobile devices, and electronics,” Assurant President and CEO Alan Colberg stated in the company’s press release. “Together, we believe we can deepen our global footprint and accelerate profitable growth in key markets already on Assurant’s strategic roadmap, while realizing substantial operating synergies, generating more diversified and predictable earnings, and furthering product innovation on a global scale.”
The transaction values The Warranty Group at $1.9 billion, or $2.5 billion when including the company’s 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% of the combined company, while TPG and its affiliates will own the remaining 23%.
Assurant will also pay approximately $372 million in cash to TPG, which bought The Warranty Group from Canadian private equity firm Onex Corp. in 2014 for $1.5 billion.
“The transaction brings together two businesses with highly aligned expertise in markets across the world,” said Nelson Chai, The Warranty Group’s president and CEO. “We believe this combination enhances our ability to offer best-in-class products and services in addition to providing new opportunities to our clients, partners, employees, and key stakeholders.”
Upon closing, which is expected in the first half of 2018, 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, officials noting that Assurant expects to generate $60 million pre-tax operating synergies by the end of 2019.
“This strategic partnership is an outstanding outcome for both Assurant and The Warranty Group, positioning the combined company for continued success,” said TPG Capital Partner Eric Leathers. “Since acquiring The Warranty Group, we have supported the company’s management team as they have expanded their global service contract business by pursuing attractive pathways for growth. This combination builds on these initiatives, and we at TPG are excited by the future value creation that will stem from this.”
Originally posted on F&I and Showroom
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