The Warranty Group has been acquired by New York-based insurance specialist Assurant in a move which aims to “further cement” its global lifestyle growth strategy.
The total enterprise value of $2.5 billion reflects approximately 10.4 million Assurant shares, or $993 million based on the acquisition agreement closing price, and approximately $1.5 billion in cash, after considering the repayment of The Warranty Group’s $596 million in existing debt.
Assurant’s president and chief executive, Alan Colberg (pictured), said: “We are excited to close our acquisition of The Warranty Group, which significantly advances our global lifestyle growth strategy of helping consumers protect their appliances, mobile devices and electronics, while solidifying our global position as the premier provider of vehicle protection services.
“The combination of our two companies will support ongoing product and service innovation for our clients and consumers, while we expect to realise significant operating synergies and generate more diversified and predictable earnings over time.”
Jointly operating across 21 countries, the acquisition of The Warranty Group deepens Assurant’s global footprint and provides additional resources to accelerate Assurant’s mobile strategy in key markets such as Asia-Pacific, it said in a statement.
The Warranty Group’s U.S. vehicle protection business brings new client partnerships and distribution channels, including dealer networks and national accounts to Assurant.
Assurant said that the acquisition also amasses greater consumer insights, which will be used to capitalise on emerging trends in the auto market to better serve clients and consumers.
With annualised revenue greater than $2 billion as of March 31, 2018, The Warranty Group expands Assurant’s size and scale within vehicle protection, extended service contracts and financial services.
By the end of 2019, Assurant expects to generate $60 million of pre-tax operating synergies by optimising global operations.
As part of this transaction, Peter McGoohan and Eric Leathers, both representatives of TPG Capital, will join Assurant’s board of directors and will serve on the board’s compensation and finance and risk committees, respectively.