Golden Gate-Backed Nassau to Buy Phoenix in First Acquisition

  • Nassau to pay $217.2 million, or $37.50 a share for insurer
  • Phoenix to become Nassau's U.S. life and annuity platform

Nassau Reinsurance Group Holdings LP, which was formed this year with backing from private-equity firm Golden Gate Capital, agreed to buy Phoenix Cos. for about $217.2 million to push into the life insurance and annuity market in the U.S.

Nassau will pay $37.50 a share, compared with Monday’s closing price of $13.03 for Phoenix, the buyer said in a statement Tuesday. Hartford, Connecticut-based Phoenix, which was founded in 1851 to cover people who abstain from alcohol, had dropped more than 80 percent this year through Monday amid losses and accounting errors.

The deal is the first for New York-based Nassau, which got an equity capital commitment of about $750 million from Golden Gate, the $15 billion firm that has also invested in retailer Eddie Bauer and restaurant chain Red Lobster. Nassau announced in May that it would be led by Phillip J. Gass, who was previously chairman of Fidelity & Guaranty Life. The buyer said it will contribute $100 million after the completion of the deal to stabilize Phoenix.

The capital will help “accelerate the company’s turnaround, bolster its financial strength and ratings, and benefit policyholders and distribution partners,” Gass said in the statement.

Phoenix jumped to $34.53 in early trading at 8:28 a.m. in New York. The insurer had shareholders’ equity, a measure of assets minus liabilities, of $199.2 million as of June 30.

The target company’s banks were Sandler O’Neill & Partners LP and Goldman Sachs Group Inc., while Simpson Thacher & Bartlett LLP served as legal adviser. Nassau used Macquarie Group Ltd. and Debevoise & Plimpton LLP. The deal is expected to be completed by early 2016, according to the statement.

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