UK's Ardonagh to buy Australia's PSC Insurance in $1.51 billion deal

By Roushni Nair

(Reuters) -Australia's PSC Insurance will be acquired by Ardonagh Group in a deal valuing the company at A$2.26 billion ($1.51 billion), PSC said on Wednesday, helping the UK-based insurance distribution platform expand its footprint in the region.

The takeover of PSC, whose diversified insurance services consist of over 40 trading brands in Australia and abroad, comes as policy prices edge higher.

Ardonagh will pay A$6.19 in cash per PSC share, representing a premium of 7.8% on PSC's last close of A$5.74 on Wednesday.

"The all-cash premium price in the deal highlights the significance of PSC to Ardonagh in expanding its footprint in the Australian market," said Hebe Chen, an analyst with IG Markets.

Ardonagh said it plans to merge PSC's Australia and New Zealand operations with Envest Pty Ltd, an entity it acquired in February last year.

The combined unit, which will operate under Envest CEO Greg Mullins, would become one of Australia's largest privately owned insurance distribution platforms, placing A$3.3 billion in gross written premium annually, it added.

"More importantly, with the proposed merged entity, PSC will be in a more competitive shape to ride on the new growth cycle in the insurance sector," Chen said.

PSC's board has recommended shareholders vote in favour of the deal, which has an enterprise value of A$2.43 billion, including debt.

Ardonagh said it will fund 50% of the deal from existing shareholders Madison Dearborn Partners and HPS Investment Partners and the rest from existing and new debt.

The deal is expected to be implemented in late September. ($1 = 1.5211 Australian dollars)

(Reporting by Roushni Nair in Bengaluru; Editing by Savio D'Souza, Janane Venkatraman and Nivedita Bhattacharjee)