NYSE-listed Aspen Insurance Holdings has confirmed this morning that it has agreed to a $2.6bn buy out from investment heavyweight Apollo Global Management, as predicted by re-Insurance.com yesterday.
The all-cash terms are the equivalent to $42.75 a share, or a modest premium of around 1.15x price-to-Aspen’s $38.21 NTA, and the transaction is expected to close in the first half of 2019.
It is another major M&A transaction in 2018 following The Hartford’s $2.1bn deal with Navigators last week; AXA’s $15.3bn deal with XL Capital and AIG’s $5.6bn swoop for Validus and comes after Aspen initiated a sale process in late March following heavy 2017 losses.
In a statement, Aspen’s long-serving CEO Chris O’Kane said the transaction is “a testament to the strength of Aspen’s franchise, the quality of our business and the talent and expertise of our people”.
He added: “Under the ownership of the Apollo Funds, Aspen will have additional scale and access to Apollo’s investment and strategic guidance, which will help us to accelerate our strategy and take Aspen to the next level. We are excited about the future as we embark on a new chapter in our history with a partner that understands our strengths, culture and customer-centric philosophy.”
Once closed, Aspen will be an additional insurance platform for the investment giant. The firm is expected to close its acquisition of outside shareholders in the Bermuda legacy firm Catalina early next month while earlier this month, Re-insurance.com revealed Apollo has launched a new Bermuda class 3A reinsurer, Acra Re Ltd, which will be used to finance large trades and capital relief transactions.
It is also the controlling shareholder in Athene Holdings, the giant Bermudian annuity buy-out firm.
Apollo partner Alex Humphreys said: “We believe that Aspen benefits from strong underwriting talent, specialized expertise and longstanding client relationships which makes them well positioned in the market”.
He added: “We look forward to working with Aspen to build on the existing high quality specialty insurance and reinsurance business and we aim to leverage Apollo’s resources and deep expertise in financial services to support the Company as it embarks on its next chapter.”
In 2011, Apollo partnered with fellow buy-out firm CVC to acquire the listed Lloyd’s insurer Brit Insurance paying £888mn, or 1x book for the business. After parachuting new management, rationalising the business and focussing on core lines, it exited its investment at a handsome premium.
Aspen was advised by Goldman Sachs and JP Morgan while Apollo was advised by Libero Ventures and Willis Towers Watson.
Yesterday, Aspen’s share price rose 4.5 percent yesterday on NYSE to close at $40.10. It is expected to leap further today when trading begins.