Australia’s Steadfast Group has agreed to a A$7.7 billion ($5.52 billion) buyout by a consortium backed by U.S. investment giant KKR, the insurance broker said on Friday.
Under the deal, specialty insurance distributor Amwins Group will acquire Steadfast‘s underwriting agency business, while Dragoneer Investment Group will take control of its broking operations.
Steadfast shareholders, as previously announced, will receive A$6 apiece, representing a nearly 52% premium to the stock’s closing price on June 9 — the last trading day before the company disclosed a non-binding proposal from Dragoneer and Amwins.
“The deal is symptomatic of the persistent valuation arbitrage between Australian public and global private markets,” said Emanuel Ajay Datt, managing director at Datt Capital.
The offer comes months after Steadfast chief Robert Kelly was temporarily removed during an external workplace complaint probe, which pushed its shares to their lowest in nearly three years after the announcement in October. They have risen more than 40% since June 9.
Steadfast‘s board has unanimously recommended that shareholders vote in favour of the consortium’s scheme, in the absence of a superior proposal and subject to an independent expert concluding the deal is in shareholders’ best interests.
The company is aiming to implement the scheme in December, it said in an after-market filing.
VALUATION GAP FUELS TAKE-PRIVATE WAVE
The Steadfast transaction underscores a surge in Australian public-to-private deals, with foreign buyers and private-equity firms targeting listed companies, particularly in the financial services sector.
Other offers include Swedish private-equity firm EQT AB’s pursuit of asset manager Perpetual, and New York-based investment manager CC Capital Partners’ takeover of financial services provider Insignia Financial.
Datt expects further interest in public-to-private deals in Australia, particularly in “quality” midcaps, which have been “orphaned” by passive flows into index heavyweights.
Reuters
