The shares of Sagicor Financial Corporation, valued at approximately US$536 million, are to be sold to a Toronto-based special purpose acquisition firm Alignvest Acquisition II Corporation in a deal that officials of both entities expect will unlock value for its shareholders.
Once the insurance company approves the deal Sagicor will delist from the stock exchanges in Barbados, Trinidad and Tobago and London and list on the Toronto Stock Exchange (TSX.
In a release this morning Sagicor noted that Alignvest would acquire all the shares of Sagicor by way of a scheme of arrangement under the laws of Bermuda, at a price of US$1.75 per share with an aggregate value of approximately US$536 million. Sagicor re-domiciled in Bermuda from Barbados in 2016 but maintains its head office here.
If the deal goes through, a new entity named New Sagicor will be created.
Alignvest will continue from Ontario, Canada to Bermuda and become regulated under the Companies Act 1981 of Bermuda.
With today’s major announcement Sagicor is giving the assurance that its head office is staying put in Barbados and no changes are expected to the operating companies. The Sagicor Group operates in insurance, commercial banking, investment and wealth management.
The company reported that last year it recorded its best overall performance since 2008. Last year Sagicor earned a US$115.3 million in profit, compared to US$109.3 million in 2016. In the first quarter ended March 31, its net income was US$38.9 million, compared to US$27 million in the same period last year.
The release said Aligninvest, which was listed on the TSX in May 2017 and raised or received subscriptions for an aggregate of CA$565 million, has no current operations and this proposed business combination with Sagicor is intended to be its sole and only qualifying acquisition.
The completion of the arrangement is dependent upon certain conditions and other regulatory approvals, as well as approval by the shareholders of Alignvest and Sagicor, which company officials expect to come in the first quarter of next year. If conditions are met, the transaction is also expected to close during the first quarter or early in the second quarter of 2019.
The appointed board is expected to consist of existing Sagicor board directors and include several Alignvest-appointed directors that bring deep global insurance and financial services experiences.
On closing, Mr Timothy Hodgson, Managing Partner of Alignvest Management Corporation, will become the Chairman of the Board.
Vice Chancellor of the UWI, Sir Hilary Beckles and former CEO of CIBC FirstCaribbean Rik Parkhill are also proposed directors for the Sagicor Board.
As a result of this deal Sagicor and Alignvest will acquire Scotiabank’s life insurance operations in Jamaica and in Trinidad & Tobago and will also enter into a 20-year exclusive agreement where Sagicor will provide insurance solutions to Scotiabank’s clients in Jamaica and Trinidad & Tobago.
Currently, Jamaica accounts for 32 per cent of Sagicor’s business and Trinidad and Tobago between 11 and 15 per cent.
Sagicor expects that this transaction will increase annual net income by approximately US$30 million. The deal is supposed to be finalized in 2020.
President and CEO of Sagicor Financial Corporation Dodridge Miller said the transaction was a “transformational” one for Sagicor, adding that it fully supported the company’s strategic plan.
“We have come to work very closely with our partners at Alignvest and believe our combined expertise will continue to accelerate Sagicor’s growth strategy with improved access to capital. Our strategic vision remains consistent, and our actions continue to lead us on a path towards being a leading provider of world-class insurance and financial services to meet the changing needs of our customers,” said Miller.
Sagicor shareholders as at December 6, 2018, the election record date, will have the option of either the cash consideration of US$1.75 per Sagicor share or Alignvest common shares in an amount based on an exchange ratio which the parties have agreed has a value of US$1.75 per Sagicor share, or a combination of the cash and shares; or for all other holders, the Share Consideration.
Any cash consideration is only available in respect of up to 10,000 Sagicor shares held by each Sagicor shareholder as at the election record date which continue to be held as at the time of closing of the transactions contemplated in the Arrangement Agreement, or at the closing. All other consideration paid to Sagicor shareholders at the closing will be “Share Consideration”.
Sagicor believes that the transaction will unlock significant value for its shareholders in several ways including the listing on the TSX, which will provide access to “a liquid exchange market” and the opportunity to access sophisticated institutional and large-scale investors, leading to better price discovery. The company also believes the transaction will be used to support the cash option to shareholders and to fund growth, and that Alignvest would be delivering significant value to Sagicor with its corporate development acumen and its recruitment of highly experienced directors to the board.
The company said the board of directors of Alignvest and Sagicor have approved the transaction and determined that it is fair to their respective shareholders and in the companies’ respective best interest.
Managing Partner at Alignvest Management Corporation Timothy Hodgson said he was extremely excited about the partnership.
“Over the last 15 months, we have worked closely with Sagicor’s management team to better understand and embrace their business. We believe in their long-term shareholder value creating vision for the Company, and in their ability to be good stewards of our shareholders’ capital. Supplemented with the expertise and resources that Alignvest will bring to bear, Sagicor will have the capital and capabilities to accelerate the execution of their growth plans through the pursuit of near-term organic and inorganic growth initiatives. Sagicor and Alignvest look forward to working together to create and unlock shareholder value,” said Hodgson.