Back to top

Image: Bigstock

Karfunkel-Zyskind Family to Buy AmTrust for $2.7B in Cash

Read MoreHide Full Article

Shares of AmTrust Financial Services, Inc. lost 2.1% in the last couple of trading sessions following the announcement that Evergreen Parent will buy 45% of the company’s stake, which Karfunkel-Zyskind Family does not own at present. The deal is valued at $2.7 billion.

Evergreen Parent, L.P. is an entity formed by private equity funds managed by Stone Point Capital LLC along with Barry D. Zyskind, chairman and CEO, AmTrust, George Karfunkel and Leah Karfunkel (collectively, the Karfunkel-Zyskind Family). The Karfunkel-Zyskind Family had earlier announced its intention to acquire AmTrust’s shares on Jan 9, 2018.

Per the deal value, shareholders of AmTrust will receive $13.50 in cash for each share held, up from the previous offer of $12.25. The new offer represents 33% premium to the closing price on the aforementioned date in January, this year. The transaction is estimated to culminate in the second half of 2018, subject to closing conditions.

Per Mr. Zyskind, chairman and CEO, AmTrust, this acquisition will likely help deepen the company’s focus on long-term growth objectives rather than concentrating on short-term results given that the company is transitioning into a private entity.

AmTrust has been pursuing strategic initiatives to help accelerate its growth profile. On Feb 28, AmTrust transferred 51% equity interest in some of its U.S.-based fee businesses to Madison Dearborn Partners. The divestiture is expected to expand the company’s capital base as well as well poise its business for sustained growth.

AmTrust’s leadership position in commercial small business space, expansion of other segments and an impressive inorganic growth story place it strongly for growth. The company also aims to make investments that reap returns in line with the sector.

Shares of AmTrust have outperformed the industry year to date. The stock has rallied 27.1% compared with the industry’s 2.3% increase.
 


 

Insurers Following Suit
    
Chasing the organic growth route, ramping up one’s operational profile seems a well-accepted strategy adopted by insurers as acquisitions set a prominent trend in the insurance domain. Recently, AXA Group has inked an acquisition deal to buy XL Group Ltd for $15.3 billion in cash. Assured Guaranty US Holdings Inc., a subsidiary of Assured Guaranty Ltd. (AGO - Free Report) , too follows suit by buying a minority stake in Cadia (Malta) Limited to invest in alternative investments. Last but not the least, Brown & Brown, Inc.’s (BRO - Free Report) unit, Brown & Brown Insurance Agency of Virginia, has of late purchased all the assets of Kerxton Insurance Agency, Inc. and Fitness Underwriters, Inc.  

Zacks Rank

AmTrust carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.    

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Brown & Brown, Inc. (BRO) - free report >>

Assured Guaranty Ltd. (AGO) - free report >>

Published in