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Carlyle Group Concludes Majority Stake Buyout in Sedgwick

Zacks Equity Research

Recently, The Carlyle Group LP CG completed the acquisition of majority stake in Sedgwick. The company fully replaced Sedgwick’s current majority shareholder KKR, in a deal valued at about $6.7 billion, announced in September 2018.

Equity portion of the investment was funded by Carlyle Partners VII, an $18.5-billion fund that carries out buyout transactions in the United States, and Carlyle Global Financial Services Partners III, L.P., a dedicated financial services buyout fund. Further, Bank of America’s BAC Merrill Lynch, Morgan Stanley MS and KKR Capital Markets are among the joint lead arrangers and joint bookrunners for the debt financing of this transaction.

On closure of the deal, Stone Point Capital LLC and Caisse de dépôt et placement du Québec, along with Sedgwick management, continued to be minority investors.

Lately, Carlyle Group seems to be focused on driving growth through inorganic strategies. Recently, it announced the completion of the acquisition of a majority stake in AK Life Sciences, a pharmaceutical company in East Africa. This acquisition is expected to support the investment manager’s expansion into new markets and broaden supplier relationships.

Prior to the above-mentioned acquisition, Carlyle Group had teamed up with Diamondback Energy FANG to form a joint venture for the development of oil and gas assets in the San Pedro area of Pecos County. Per the deal, it will fund 85% of the development fund program. On achieving some performance milestones under the program, Carlyle Group's working interests will largely be transferred to Diamondback.

The company’s shares have lost around 31.5% over the past three months compared with the industry’s decline of 19.3%. The stock currently carries a Zacks Rank #5 (Strong Sell).


 

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