Apax Partners and Morgan Stanley’s chief investment unit has agreed to acquire Chicago insurance brokerage Hub International Ltd. for around $1.7 billion. The decision was revealed by Hub recently that also marked the fact that yet another private-equity move into the brokerage space. Moreover, under the arrangements of the takeover plan, Apax and Morgan Stanley will offer $40 per share for Hub, which consider itself as one of the nation’s top 10 brokerages by revenue.
Hub shares closed at $34.49 on regular trading Friday, this means in the takeover the shareholders are being given around 16 percent premium. The board of directors of the company has unanimously agreed in the favor of the acquisition and the transaction. Merrill Lynch & Co. and Scotia Capital have provided consultancy on the issue. However, the transaction is subject to shareholder approval, Canadian court approval, and other regulatory approvals including merger notification filings in the United States and Canada, and of course customary closing conditions.
Under the terms of the deal, Hub may consider alternative proposals from third parties until March 19. If it terminates the Apax deal in favor of another, Hub will have to pay a $21 million breakup fee. On the other hand, Fairfax Financial Holdings, which holds 10.3 million shares, or 26 percent of Hub’s outstanding shares, also voted in favor of the deal.
The agreement is likely to be concluded by the second quarter as it requires approval from shareholders as well as regulators in the U.S. and Canada.
