July 06, 2017
Bermudian (re)insurer Axis has struck a $604mn all-cash deal to acquire Novae, ending speculation surrounding Lloyd’s carrier’s future.
The transaction values Novae at around 1.5x of the carrier’s net tangible book value as of year-end 2016.
The 700 pence a share consideration represents around a 20 percent premium to Novae’s share price as of 4 July closing and an aggregate transaction value of about £467.6mn.
Novae had a market value of £374mn on 4 July.
The acquisition will allow Axis to create a $2bn London specialty market carrier and a top 10 insurer at Lloyd's.
Axis said that the combined entity would have gross written premiums of more than $6bn based on last year's performance of the two companies.
Following the acquisition, Novae CEO Matthew Fosh will become Axis’ executive chair of Europe and will help guide the integration of the two businesses, while the Lloyd’s carrier’s chief underwriting officer Robert Forster will be appointed to the leadership team of Axis Insurance’s international division.
Commenting on the deal, Axis CEO Albert Benchimol said: “The acquisition of Novae is a great opportunity to accelerate the breadth and depth of talent, lines of business, and leadership positions that we are developing in the London market for specialty risks, advancing our growth and enabling us to better serve our clients.”
Meanwhile Fosh said: “Axis is an ideal partner for Novae’s clients and our employees – and I am particularly enthused for our employees who will benefit from having access to the financial strength of a major global carrier and to the enhanced tools, support and resources required to grow our portfolio of underwriting businesses.”
Axis said that it has identified around $50mn of run-rate, pre-tax cost synergies from the deal, which it expects to be fully realised in year 2.
The deal will leave just three publically listed Lloyd’s carriers: Beazley, Hiscox and Lancashire. This follows a wave of acquisitions of Lloyd’s carriers in recent years including Amlin, Catlin and Brit.
The deal is expected to close in the fourth quarter of 2017.
Credit Suisse and Fenchurch Advisory Partners are acting as financial advisers to Axis while Evercore is advising Novae.