British private equity firm CVC Capital Partners Ltd said it had agreed to take a majority stake in US insurance claims management firm Cunningham Lindsey Group Limited, currently owned by Stone Point Capital LLC and Fairfax Financial Holdings Ltd (TSE:FFH).
The parties did not disclose the price CVC would pay for the majority ownership, but Reuters cited an informed source as saying that the deal valued Cunningham at as much as USD1bn (EUR774.5m).
Stone Point bought in 2007 a majority stake in the over 100-year old Cunningham, with Fairfax keeping a significant minority position. The target firm has now around 7,000 staff operating in 61 countries. Its current management team led by CEO Philippe Bes will stay in place after the deal with CVC, while Bes will join Cunningham’s board. The management team will remain substantial shareholder, backing the firm’s plans for future global growth. Stone Point will also continue to be an equity owner alongside Fairfax and CVC, it said.
Bes welcomed the deal saying it would help his company’s ongoing efforts to expand and boost its position in key insurance markets. Cunningham will be able to use CVC’s diversified international coverage to widen its global footprint, the CEO added.
The transaction is being carried out under a recapitalisation agreement. CVC plans to bring its global network and resources to Cunningham to enable it to continue its growth, Kamil Salame, CVC partner and chief of US Financial Institutions Group, mentioned in a comment. The private equity firm will use secured debt to finance the transaction.
Completion is pending regulatory approvals among other conditions.
Cunningham Lindsey used the advisory services of BofA Merrill Lynch and Debevoise & Plimpton LLP. CVC was advised by Willis Capital Markets and Advisory Ltd, Weil, Gotshal & Manges LLP and Clifford Chance LLP.