HC2 Holdings, Inc. ( HCHC Quick Quote HCHC - Free Report) yesterday announced that it has agreed to divest its insurance segment in a $90-million transaction. The buyer of the segment is Continental General Holdings LLC. It is worth noting here that shares of HC2 Holdings decreased 2.5% yesterday, ending the trading session at $3.87. Continental General Holdings is managed by Michael Gorzynski — a director of HC2 Holdings. Notably, Michael Gorzynski is also the owner (beneficial) of HC2 Holdings’ 6.6% outstanding common shares. Inside the Headlines
As noted, the to-be-divested business of HC2 Holdings consists of Continental Insurance Group Ltd. along with its subsidiaries (wholly-owned) — Continental LTC Inc. and Continental General Insurance Company.
HC2 Holdings anticipates receiving cash of $65 million upon the completion of the divestment. The transaction value also includes cash and assets. Notably, the company will likely use the divestment proceeds to fund its general corporate purposes. The divestment has been approved by HC2 Holdings’ board of directors and will likely be completed in third-quarter 2021, after the receipt of regulatory approvals and the fulfillment of customary closing conditions. The company noted that the divestment is in sync with its plans to strengthen its capital structure, growth opportunities and focus on key businesses, including spectrum, life sciences and infrastructure. Earlier in the month, HC2 Holdings announced that it agreed to acquire Lynchburg, VA-based Banker Steel Holdco LLC. The latter is a specialist in providing fabricated structural steel. Along with this, it engages in proving erection services to customers in the commercial construction market (east coast). The buyout is anticipated to close in second-quarter 2021. Price Trend & Other Stocks With Divestment Activities
HC2 Holdings is focused on strengthening its insurance, spectrum and life sciences businesses in the quarters ahead. This along with a healthy balance sheet, lower corporate expenses and enhance growth opportunities will likely be beneficial. However, the pandemic-related woes are concerning.
In the past three months, the company’s shares have gained 18.7% compared with the industry’s growth of 7.8%.
Three other companies (from the same industry) that have divested assets in the past few quarters are
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