Enstar Group has reached an agreement to be taken private in a significant deal orchestrated by a consortium led by Sixth Street, valued at an impressive $5.1 billion. This strategic move reflects the evolving landscape of the insurance sector and highlights the continuing interest from institutional investors in acquiring established entities. Participating in this transaction are notable firms such as Liberty Strategic Capital and JC Flowers, among other institutional investors.
According to the statement released on Monday, the cash value offered in this deal stands at $338 per share, which constitutes a premium of roughly 8.5% over the insurer's 90-day average share price as of Friday. Following the announcement, shares of Enstar experienced a sharp decline, shedding 6.4% in midday trading, indicating some market apprehension despite the premium offered. Dominic Silvester, the Chief Executive Officer of Enstar, expressed optimism about the deal, stating, "This transaction provides a full liquidity event for shareholders and is a testament to the strength of our team.
We believe this is the best next step for our shareholders and we look forward to this exciting new chapter." This sentiment underscores the company's commitment to enhancing shareholder value amidst the transition. As part of the transaction, Enstar is set to return approximately $500 million from its balance sheet to shareholders, further solidifying its dedication to providing value to its investors. Michael Muscolino, a partner at Sixth Street, noted Enstar's established capabilities, remarking, "Enstar has a proven track record of delivering innovative legacy property and casualty solutions and capitalizing on attractive opportunities in the reinsurance market, while maintaining a conservative balance sheet and strong risk management culture." This perspective indicates confidence in Enstar's ongoing operations and potential growth under private ownership. Pending regulatory approvals and consent from Enstar's shareholders, the deal is anticipated to finalize in mid-2025.
Post-acquisition, Enstar will officially transition to a private company, signaling a new direction in its corporate strategy. Furthermore, the board has implemented a 35-day go-shop period to allow for the solicitation of alternative acquisition proposals, providing a window for other potential buyers to emerge. In a separate update, Enstar recently showcased robust second-quarter results, reporting a revenue increase to $236 million, a significant rise from $154 million in the same period last year.
Additionally, earnings per share surged to $8.49 for the three months ending June 30, a notable increase from $1.34 the previous year, mirroring the firm’s growth trajectory. In organizational changes, Enstar announced that President Orla Gregory would step down at the end of the fiscal year, indicating a potential shift in leadership as the company navigates through this transformative period. For investors and market analysts alike, these developments present both opportunities and challenges, particularly in how Enstar positions itself within the competitive insurance market post-acquisition..