October 18, 2017 / 10:43 AM / 2 years ago

Assurant enters Asia-Pacific with $1.9 billion Warranty Group deal

(Reuters) - U.S. insurer Assurant Inc (AIZ.N) will expand into the Asia-Pacific region with a $1.9 billion deal to buy Warranty Group that will add extended warranty contract services for consumer goods to its property and casualty portfolio.

Shares of Assurant climbed more than 4 percent in early trading on Wednesday to their highest in nearly two months.

Assurant will fund the deal with debt and preferred shares, the company said on Wednesday. The deal has a value of $2.5 billion, when including Warranty Group’s debt.

Chicago-based Warranty, a unit of U.S. private equity firm TPG, provides extended warranty contracts for an array of items including home appliances, automobiles, mobile phones and electronics.

Assurant shareholders will own about 77 percent of the combined company, while TPG will hold the rest.

Assurant expects the deal to add modestly to 2018 operating earnings per share on a run-rate basis. reut.rs/2giwAM1

By the end of 2019, the insurer expects to save $60 million in pre-tax costs resulting from job eliminations and infrastructure changes, Assurant said on a call with analysts.

The deal is expected to close in the first half of 2018.

Morgan Stanley served as financial adviser to Assurant, while Willkie Farr & Gallagher provided legal counsel.

UBS was Warranty Group’s financial adviser. Skadden, Arps, Slate, Meagher & Flom was its legal adviser.

TPG bought Warranty Group from Canadian private equity firm Onex Corp (ONEX.TO) in 2014 for an enterprise value of about $1.5 billion. reut.rs/2gkG21G

Reporting By Aparajita Saxena in Bengaluru; Editing by Anil D'Silva and Sai Sachin Ravikumar

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