According to a Scheme Implementation Deed (SID), the acquisition will involve purchasing all PSC shares at AU$6.19 each through a scheme of arrangement.
Ardonagh, which reported growth in its business lines in the financial year ending December 31, 2023, will integrate PSC’s operations in Australia and New Zealand with Envest Pty Ltd (Envest), which Ardonagh acquired in early 2023.
Together, the merged entity will form one of the largest private insurance distribution networks in the region, handling AU$3.3 billion in gross written premiums (GWPs) annually.
Envest CEO Greg Mullins will oversee the combined operations across Australia and New Zealand.
“We are excited by the prospects which we believe will deliver long term value for our customers, brokers, and agencies. Envest and PSC are very aligned culturally, driving growth through the retention and development of talented people, and investment in a collection of distinct, independent brands led by local management teams,” Mullins said.
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PSC’s UK operations will join Ardonagh Specialty and Ardonagh Advisory, solidifying the group’s footprint in UK wholesale and retail broking.
“The acquisition, which has secured the unanimous recommendation of PSC’s board, is a significant milestone in the global growth of Ardonagh and underlines our strong commitment to the markets we serve,” said Ardonagh CEO David Ross. “Ardonagh has been assembled as a bastion of independence and scale, aligning high calibre businesses and management teams around quality advice for clients and entrepreneurial connectivity within the group. PSC’s journey and values align with our own and its portfolio of highly complementary businesses provides an abundance of opportunity to strengthen our positions in Australia [and] wholesale and specialty markets.”
The acquisition will be financed through a mix of debt and equity, with half funded by existing investors Madison Dearborn Partners and HPS Investment Partners, while the remainder will come from current and new debt facilities.
Founded in 2006, PSC has a global workforce of 900 employees and manages an annual GWP of AU$2.59 billion. Chairman Paul Dwyer will join Ardonagh’s senior management team to support integration and growth strategies.
Directors and managers at PSC, who collectively own around 26% of the company’s shares, will retain their holdings within Ardonagh. PSC’s board unanimously recommended that shareholders vote in favour of the deal.
“This transaction recognises the quality and strength of PSC’s people and business that has developed over the last 18 years. We believe this transaction maximises value for PSC shareholders while also providing an excellent platform for growth for PSC employees and clients,” Dwyer said.
The SID includes customary provisions and a break fee of AU$22.6 million, should the agreement fall through. The transaction is expected to close in late September 2024, contingent on shareholder and court approvals.
Financial advisors for Ardonagh include Macquarie Capital and Stanton Road Partners, while Herbert Smith Freehills and Ashurst provide legal support.
