Enstar Group Limited (Nasdaq: ESGR) has announced a definitive merger agreement with Sixth Street, marking a significant move in the insurance and investment sectors. Under the agreement, Sixth Street, with participation from Liberty Strategic Capital, J.C. Flowers & Co. LLC, and other institutional investors, will acquire Enstar for $338.00 per ordinary share. This deal values Enstar at a substantial $5.1 billion and is poised to reshape the landscape of legacy insurance solutions.

Premium Pricing and Strategic Impact

The proposed acquisition offers Enstar shareholders a premium of approximately 8.5% over the company’s 90-day volume weighted average price (VWAP) as of July 26, 2024, the last trading day before the announcement. Additionally, the offer reflects a 6.9% premium over the 60-day VWAP. This valuation underscores Sixth Street’s confidence in Enstar’s robust market position and future potential.

Dominic Silvester, Chief Executive Officer of Enstar, expressed enthusiasm about the transaction, highlighting Enstar’s strong legacy in the insurance market. He emphasized that the deal represents a significant liquidity event for shareholders and acknowledges the strength of Enstar’s team and its track record. Silvester anticipates that this merger will serve as a pivotal step in Enstar’s evolution.

Sixth Street’s Vision and Commitment

Michael Muscolino, Co-Founder and Partner at Sixth Street, praised Enstar’s proven capabilities in delivering innovative property and casualty (P&C) solutions. He noted Sixth Street’s longstanding respect for Enstar’s management and its strategic direction. Muscolino assured that Sixth Street’s involvement would continue to support Enstar’s current business strategy and risk management culture.

Transaction Details and Approval Process

The merger has been unanimously approved by Enstar’s Board of Directors and is set to close in mid-2025, pending shareholder and regulatory approvals. The agreement stipulates that Enstar shareholders will receive $338.00 per share in cash. The transaction is fully financed, with Sixth Street and its co-investors providing the necessary equity. Furthermore, Enstar plans to return approximately $500 million from its balance sheet to shareholders as part of the transaction.

Enstar has a 35-day “go-shop” period, ending on September 2, 2024, during which it can seek alternative acquisition proposals. However, there is no guarantee that this period will yield a superior offer. The company retains the right to terminate the merger agreement to pursue a better proposal, should one arise.

Post-Transaction Outlook

Upon completion of the merger, Enstar’s common stock will be delisted from NASDAQ, transitioning the company to a privately-held entity. Despite the change in status, Enstar will continue to operate under its existing name and business model.

Advisors for the Deal

Goldman Sachs & Co. LLC is serving as the financial advisor to Enstar, with legal support from Paul, Weiss, Rifkind, Wharton & Garrison LLP and Hogan Lovells US LLP. For Sixth Street, Ardea Partners LP, Barclays PLC, and J.P. Morgan Securities LLC are advising on financial matters, while Simpson Thacher & Bartlett LLP, Debevoise & Plimpton LLP, and Cleary Gottlieb Steen & Hamilton LLP provide legal counsel.

About the Companies

Enstar Group Limited is a prominent global insurance group known for its innovative capital release solutions. Since its inception in 2001, Enstar has acquired over 117 companies and portfolios worldwide. Sixth Street, founded in 2009, is a major global investment firm with over $75 billion in assets under management, renowned for its flexible capital and data-driven investment strategies.

  $5.1 billion acquisition, Dominic Silvester, Enstar Group Limited, insurance merger, J.C. Flowers & Co. LLC, Liberty Strategic Capital, Michael Muscolino, Sixth Street