HAMILTON, Bermuda - Enstar Group Limited (NASDAQ:ESGR), a global insurance group, has announced its acquisition by investment firm Sixth Street, in a cash transaction valued at $5.1 billion. Under the terms of the agreement, Enstar shareholders will receive $338.00 per share, which is an 8.5% premium over the 90-day volume-weighted average price as of July 26, 2024.
The deal, unanimously approved by Enstar's Board of Directors, is expected to close by mid-2025, subject to shareholder and regulatory approvals, along with customary closing conditions. The acquisition will not alter Enstar's current operations or business strategy, ensuring continuity for the company that has established itself in the legacy insurance market over the past three decades.
Dominic Silvester, Enstar’s CEO, stated that the transaction is a "full liquidity event for shareholders" and reflects the strength of their team and business. Michael Muscolino, Co-Founder and Partner at Sixth Street, expressed admiration for Enstar's management and their ability to deliver innovative property and casualty solutions while maintaining a conservative balance sheet.
In addition to Sixth Street, co-investors including Liberty Strategic Capital, J.C. Flowers & Co. LLC, and other institutional investors are participating in the transaction. The agreement also provides a 35-day "go-shop" period, allowing Enstar to seek alternative acquisition proposals, though there is no guarantee that this will result in a superior offer.
Following the transaction's completion, Enstar will become a privately-held company and its common stock will be delisted from public trading. The company will continue to operate under the Enstar name.
Goldman Sachs (NYSE:GS) & Co. LLC and legal advisors Paul, Weiss, Rifkind, Wharton & Garrison LLP and Hogan Lovells US LLP are advising Enstar. Sixth Street's advisors include Ardea Partners LP, Barclays (LON:BARC) PLC, J.P. Morgan Securities LLC, and legal advisors Simpson Thacher & Bartlett LLP, Debevoise & Plimpton LLP, and Cleary Gottlieb Steen & Hamilton LLP.
InvestingPro Insights
As Enstar Group Limited (NASDAQ:ESGR) prepares for its acquisition by Sixth Street, the company's financial health and market performance provide a compelling narrative for investors. Enstar's aggressive share buyback strategy is a strong indicator of management's confidence in the company's value, aligning with the premium offered in the acquisition deal. This is further emphasized by Enstar's attractive earnings multiple, with an adjusted P/E ratio of 6.57 for the last twelve months as of Q1 2024, suggesting a potentially undervalued stock relative to its earnings.
Moreover, Enstar's robust financial performance is reflected in its substantial revenue growth of 338.26% over the last twelve months as of Q1 2024. Despite a quarterly revenue decline of 18.83% in Q1 2024, the company's gross profit margin remains impressively high at 99.27%, indicating efficient management of costs relative to revenues.
Investors should note that Enstar's short-term obligations currently exceed its liquid assets, which may warrant attention in the context of the acquisition. Nonetheless, the company's strong return over the last three months, with an 18.96% price total return, and its trading near the 52-week high, at 99.95% of the peak value, underscore the positive market sentiment around Enstar's performance and future prospects.
For investors seeking deeper insights, there are additional InvestingPro Tips available, which can be explored at https://www.investing.com/pro/ESGR. To access these valuable tips and comprehensive analysis tools, consider using the promo code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.