Sirius goes public through merger deal

Bermuda-based Sirius International Insurance Group plans to merge with special purpose acquisition firm Easterly Acquisition in a deal which will result in Sirius becoming a publicly listed company.

Sirius Group, a multi-line re/insurance group, and Easterly have executed a definitive agreement and plan to merge their operations. Under the terms of the agreement, Easterly would merge with a unit of Sirius Group and become a wholly owned subsidiary of Sirius Group. Upon the closing of the merger, Easterly's common stock would be exchanged for Sirius Group's common shares at a price of 1.05x Sirius Group's pro forma diluted GAAP book value per share as of June 30, 2018. Following the merger, Sirius Group's common stock will be traded on the NASDAQ.

The transaction is expected to yield a combined entity with a pro forma market capitalization of approximately $2.2 billion at closing, with current Easterly stockholders owning approximately 7 percent of the combined company immediately following the merger.

Pursuant to the merger agreement, Sirius intends to execute a private placement of common shares and request Easterly to commence a tender offer to purchase Easterly's public warrants on terms to be mutually agreed upon between Sirius and Easterly.

"We are pleased to become a public company though our partnership with Easterly," said Sirius CEO Allan Waters. "Access to the public equity markets will facilitate and accelerate our future growth via M&A transactions and organically," he noted.

Easterly CEO Avshalom Kalichstein, added: "We are excited to bring a company of the scale and stature of Sirius into the public markets.

“We believe this transaction will offer tremendous value to our shareholders, Kalichstein said.

The merger has been approved by the boards of directors of each of Sirius Group and Easterly and is expected to close at the end of the third or beginning of the fourth quarter of 2018.

Easterly has scheduled a special meeting of its stockholders for June 28, 2018 to approve an extension of time to complete a business combination through November 30, 2018.

Assuming that Easterly's stockholders approve the extension period, Sirius Group has agreed to lend to Easterly $0.03 per month through the extension period for each public share that is not redeemed at Easterly's special meeting of its stockholders on June 28, 2018. Easterly will deposit such loan proceeds into its trust account upon receipt. The loan will be forgiven if the merger does not close by November 30, 2018.

In addition, the agreement for Sirius Group to acquire a controlling interest in The Phoenix Holdings Ltd. will terminate on or prior to July 2, 2018.

In September 2017, Sirius entered into a definitive agreement to purchase 4.9 percent of Israel’s The Phoenix Holdings from Delek Group for NIS 208 million ($59.04 million) in cash. Phoenix writes life, property and casualty insurance, and also owns a credit card clearing house and Excellence, an asset management business.

Rating agency AM Best had placed Sirius' outlook "under review with negative implications" following the company's announcement to acquire control of Israeli insurer Phoenix.

The “under review” status with negative implications reflected concerns that the acquisition carries execution risk stemming from the size of the group being acquired, and changes Sirius’ strategic direction, as The Phoenix is specialised in primary business with significant life insurance and asset management activities.

Established in 1945, Sirius Group offers services in over 140 countries and wrote gross written premiums of $1.4 billion in 2017.

Sirius Group's principal equity holder is CMIG International Holding, one of China's leading private investment companies.

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