North American insurance broker Hub International, headquartered in Chicago, has entered into an agreement to be acquired by private equity firm Apax Partners along with Morgan Stanley Principle Investments, a capital investment arm of financial services firm Morgan Stanley.
Under terms of the agreement, Hub shareholders would receive $40 per share, equivalent to a 28 percent premium. The deal is expected to close at the end of the second quarter of 2007, and values Hub at approximately $1.8 billion (€1.4 billion), of which approximately $145 million is assumed debt.
Senior management team members at Hub have already committed more than $65 million in equity toward the transaction, according to a statement.
Hub has the right to seek alternative proposals through March 19; should it terminate the existing acquisition agreement, it would be required to pay a 1.25 percent break-up fee of the transaction’s equity value, or approximately $21million.
The deal must be approved by shareholders, as well as US and Canadian regulators. Its arrangement must also receive Canadian court approval.
With more than 4,000 employees located at 220 offices in 30 US states, and four Canadian provinces, Hub’s products include property, casualty, risk management, life and health insurance, as well as employee benefits, investment and wealth management.
Mitch Truwit, the head of Apax’s US financial and business services group and a partner in the firm, characterised the transaction as an opportunity to invest and partner with an outstanding management team.
“We believe Hub’s high quality team and franchise is a perfect match for Apax’s commitment to the financial and business services sector,” Truwit said in a statement.