Earlier this week, The Goldman Sachs Group Inc. (GS) agreed to buyout Atlanta-based Ebix Inc. (EBIX), an insurance software provider. The cash deal is valued at $820 million, including the outstanding debt of Ebix to be taken over by Goldman.
As per the terms of the agreement, shareholders of Ebix will be paid $20 per share in cash by Goldman. This amounts to a 7.5% premium to the closing price of Ebix’s shares on Apr 30, 2013.
The deal has received the nod from Ebix’s board of directors and awaits shareholders’ approval, following which it is expected to close in the third quarter of 2013. After this, Ebix will transform into a private company and its shares will not be publicly traded.
Notably, the company’s Chief Executive Officer – Robin Raina and Rennes Fondation own 19% of the outstanding common shares of Ebix and have agreed to favor the deal. Moreover, both will remain investors in Ebix.
Further, as per the "go-shop" provision contained in the merger agreement, Ebix may implore other strategic alternatives from third parties in the upcoming 45 calendar days. Therefore, Ebix's special committee is working to find other potential acquisition proposals during this period.
Morgan Stanley & Co. LLC, a subsidiary of Morgan Stanley (MS) served as the financial advisor to Ebix. Additionally, Credit Suisse AG (CS) acted as one of the financial advisors for Goldman.
Ebix is a software and e-Commerce services provider to the insurance and financial industries. Products provided by the company include data exchanges, agency systems, carrier systems and custom software development.
The company has been countering allegations from short-sellers who accused Ebix of furnishing inaccurate financial statements. Though the company denied such accusations, yet its stock price has gone down 37% since the first charge was levied against it in Mar 2011.
Goldman, however, is extremely confident regarding Ebix and believes that the company had no involvement in such malpractices. Therefore, Goldman is contended with the deal and is hopeful of taking Ebix to new heights and maximizing its growth potential.
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