National Financial Partners (NFP), a provider of benefits, insurance and wealth management services, is to be acquired by affiliates of private equity firm Madison Dearborn Partners.
Under the terms of the agreement, NFP shareholders will receive USD25.35 in cash for each share of NFP common stock they own, in a transaction with an equity value of approximately USD1.3bn, which includes the full value of the company’s convertible debt.
The purchase price represents a premium of approximately 26 per cent over NFP’s closing share price of USD20.05 on 12 March 2013, the last day of trading prior to press reports that NFP was considering a possible sale of the company.
As a result of interest it had received from private equity firms, NFP’s board of directors formed a special committee of independent directors to explore a possible sale of the company. After a thorough and rigorous process, and with the assistance of its legal and financial advisers, the special committee negotiated and recommended this transaction with Madison Dearborn to the full board. The transaction was unanimously approved by the board.
"This compelling transaction provides shareholders with substantial value, and is a successful outcome of the thorough process undertaken by our board," says Jessica M Bibliowicz, chairman and chief executive officer of NFP. "This agreement also provides significant opportunities for our clients and employees by partnering with an extremely well-respected firm with proven expertise in the financial services sector. NFP has a solid foundation, and we are confident the Company will thrive as a private enterprise in this next chapter of its evolution."
"Madison Dearborn’s interest in NFP is a clear endorsement of the quality and success of our business, the value of our client-centric culture, and the hard work and dedication of our people. We are confident that partnering with this world-class investor will help us continue to execute on our long-term One NFP strategy and grow the business," says Douglas W Hammond, president and chief operating officer of NFP.
The board expects to appoint Hammond as chief executive officer of NFP when Bibliowicz steps down from that role in May.
"We are pleased to have this opportunity to invest in NFP and help the company advance its strategy," says Vahe Dombalagian (pictured), a managing director at Madison Dearborn. "We look forward to working closely with the company’s leadership team as it continues to build a strong diversified business. We fully support NFP’s focus on providing high-quality and value-added services to all of its clients, including corporations, through a more unified brand across its business segments."
Madison Dearborn has obtained debt financing commitments from Deutsche Bank Securities, Morgan Stanley Senior Funding, and UBS Securities, the proceeds of which will be used to fund the transactions contemplated by the agreement and to pay related fees and expenses. Pursuant to an equity commitment letter, controlled affiliates of Madison Dearborn have committed to provide a cash investment on the terms and subject to the conditions set forth in the letter.
The transaction, which is subject to the approval of holders of a majority of the outstanding shares of NFP common stock and other customary closing conditions, is expected to close in the third quarter.
BofA Merrill Lynch served as financial adviser to the board and the special committee, while Cleary Gottlieb Steen & Hamilton was their legal counsel. Skadden, Arps, Slate, Meagher & Flom served as legal adviser to NFP. UBS Securities served as financial adviser to Madison Dearborn, while Ropes & Gray served as its legal adviser.
