Intact to acquire JEVCO

Deal to close fall 2012 for $530 million.

Intact Financial Corporation announced today that it has entered into a definitive agreement with The Westaim Corporation whereby Intact will acquire Westaim’s wholly owned subsidiary, JEVCO Insurance Company, for $530 million. JEVCO is a leading provider of specialty and niche products for individuals and businesses in Canada with approximately $350 million in direct premiums written in 2011 (based on industry data and public disclosure).

Read: Intact completes subscription receipt offering toward JEVCO purchase

The transaction, which is expected to close during the fall of 2012, has been approved by the boards of both companies and is conditional upon, among other things, the approval of Westaim’s shareholders and the receipt of the required regulatory approvals. Alberta Investment Management Corporation, on behalf of certain Funds whose investments it manages, Goodwood Inc. and the directors and executive officers of Westaim and JEVCO, have agreed to vote their Westaim shares (representing in aggregate approximately 48.6% of the outstanding common shares and approximately 53.7% of all outstanding shares entitled to vote at the special meeting of Westaim shareholders) in favour of the transaction.

The transaction will complement the company’s offering of insurance solutions to consumers and brokers, according to Charles Brindamour, CEO of Intact.

“The acquisition will allow us to expand our offering to brokers by providing them the opportunities to offer their clients complementary specialized products such as recreational vehicle insurance,” he said. “It will also broaden our offering of specialty lines products to businesses.”

CIBC World Markets Inc. is acting as exclusive financial advisor to Intact.

Financing

Intact intends to finance the acquisition and related transaction expenses from a combination of the proceeds of approximately $226 million bought deal subscription receipt financing, funds to be advanced under its existing revolving credit facility or other committed senior unsecured financing arranged by Intact for this purpose and a portion of its existing cash resources.

Intact expects to maintain its strong capital position on closing with an estimated MCT above 200% in the near term and a debt to total capital ratio estimated to remain below its target level of 20%.

Subscription Receipt Offering

Intact has entered into an agreement with a group of underwriters, led by CIBC World Markets Inc. and TD Securities Inc. for the issuance of 3.6 million subscription receipts at a price of $62.75 per subscription receipt for gross proceeds of $225.9 million pursuant to a bought deal public offering in Canada where each subscription receipt will entitle the holder to receive one common share of Intact upon closing of the acquisition. Intact has also granted the underwriters the option to buy an additional 180,000 subscription receipts exercisable at the offering price for a period of 30 days after the closing for additional gross proceeds of approximately $11.3 million. The offering is expected to close on May 11, 2012.

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