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Insurance broker USI Holdings Corp. said Tuesday, Jan. 16, it has agreed to go private in a buyout by Goldman Sachs Capital Partners for about $1.4 billion, including debt.
USI shareholders will receive $17 a share cash for each share of common stock they own, a 9.3% premium to the company's closing share price of $15.55 on Jan. 12.
On Tuesday, shares of USI gained $1, or 6.44%, to $16.55 in early afternoon trading.
With 58.4 million shares outstanding, the equity is valued at $992.9 million.
The company said Oct. 24 that it had received an "indication of interest" from an unnamed private equity firm. A USI special committee then hired Lazard and Dewey Ballantine LLP to assist in a review.
New York buyout firm Capital Z Management LLC, a longtime USI shareholder which held 16.5% as of last March, was the source of the original bid that put USI in play, one source said Tuesday.
USI said Tuesday that it had received bids from several potential acquirers, including GS Capital, the private equity arm of Goldman Sachs & Co.
At $17 a share, the sale represents a nearly 21% premium to the average closing share price for the 30 days before Oct. 24, the day USI hired a banker.
"After careful analysis, the special committee and board have endorsed this transaction as being in the best interest of our stockholders," David Eslick, USI's chairman and CEO, said in a statement.
Briarcliff Manor, N.Y.-based USI distributes property and casualty, as well as employee health and welfare, insurance to small and midsize businesses. In November, it reported that income from continuing operations fell 13.3%, to about $8.5 million, for the three months ended Sept. 30. Revenue totaled $131.7 million.
USI Holdings went public in 2002. Capital Z was its largest investor, with 24%, at the time.
At $17 a share, the New York private equity firm stands to realize about $162 million in the Goldman buyout.
Another private equity firm, ValueAct Capital Partners LP of San Francisco, has 5.1 million shares, or nearly 9%, and could realize about $87 million.
USI has disappointed when compared to its peers, a second source said. The broker competes against other insurance brokers including Brown & Brown Inc., Arthur J. Gallagher & Co., Marsh & McLennan Cos. and Willis Group Holdings Ltd.
Lazard's Michael Biondi, Stephen Campbell and Al Garner are advising the special committee, with Morton Pierce of Dewey Ballantine as counsel.
Reinhard Koester of Goldman Sachs provided financial advice to GS Capital, while Alexander Dye of LeBoeuf, Lamb, Greene & MacRae LLP was counsel.
Officials at Goldman and USI declined to comment.
The deal, which shareholders and regulators must approve, is expected to close in second quarter.
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