US-based Brookfield Reinsurance has signed a definitive agreement to purchase underwriting firm Argo for nearly $1.1bn.
Under the all-cash deal, Argo will be eligible to receive $30 in cash in exchange for each issued and outstanding Argo common share held.
The price, which will be funded by existing cash on hand and liquidity, marks a 6.7% premium to Argo’s closing stock price on 7 February 2023.
Argo specialises in underwriting speciality insurance products in the property and casualty market.
It is engaged in offering a full line of products and services to meet the coverage and claims-handling needs of businesses.
Brookfield Reinsurance CEO Sachin Shah said: “The acquisition of Argo represents another milestone in the continued expansion of our insurance solutions business. Argo’s leading US speciality platform adds a foundational piece to our expanding U.S. P&C operations.
“We look forward to partnering with the Argo team to support the growth of its core businesses, build on its strong franchise, and deliver value for policyholders.”
As per the merger agreement, Argo will stop paying dividends on its common shares until the deal is closed.
The merger has secured the nod from the two companies’ boards.
It is expected to conclude in the second half of 2023, subject to regulatory and shareholders’ clearances.
Argo executive chairman and CEO Thomas Bradley said: “This transaction brings a successful conclusion to Argo’s strategic alternatives review process and represents the best path forward for Argo, our employees and policyholders while also maximising value for our shareholders.
“By joining Brookfield Reinsurance, Argo will continue to serve our brokers with greater financial strength and opportunities to grow as a US-focused speciality insurer.”
In May 2022, Brookfield Reinsurance completed the $5.1bn acquisition of American National Group.