CF Corporation in $1.84bn Fidelity & Guaranty Life acquisition
The boards of CF Corporation and Fidelity & Guaranty Life (FGL) approved a definitive merger agreement under which CF Corp. will acquire FGL for a total of approximately $1.84 billion, plus the assumption of $405 million of existing debt.
The purchase consideration implies a value of 1.1x adjusted book value as of March 31, 2017. The investor group, which includes the founders of CF Corp., Chinh Chu, and William Foley, II, funds affiliated with Blackstone and Fidelity National Financial, will invest approximately $900 million in common and preferred equity to fund the transaction.
FGL is a provider of fixed indexed annuities and life insurance products, with approximately $28 billion of total assets. CF Corporation is an acquisition company created by a former Blackstone Group L.P. partner and Fidelity National Financial Inc.’s chairman.
Following the close of the transaction, FGL will continue to be led by its current management team under Chris Littlefield as President and CEO. FGL will remain headquartered in Des Moines, Iowa, and will continue operations from Baltimore, Maryland, and Lincoln, Nebraska. Messrs. Chu and Foley will serve as Executive Chairmen of the Board, which will be composed of a majority of independent directors.
Foley said: "This is an exciting transaction that we expect will enable us to generate attractive returns for our shareholders by accelerating FGL's growth and profitability through efficient structuring and improved investment management capabilities. I look forward to working closely with Chris and the entire management team to help advance FGL's strategy while continuing to provide industry-leading retirement savings products to policyholders."
Chu added: "FGL is a very high-quality business with attractive demographic tailwinds. We look forward to working with management to continue to build a premier insurance platform and accelerate value creation for shareholders. CF Corp. is an ideal platform for FGL given our permanent capital and blue chip long-term investor base. This transaction is transformative and the combination of CF Corp., Blackstone and FNF will add tremendous value to FGL."
The transaction is expected to close in the fourth quarter of 2017.
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