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Biglari Holdings to Acquire Pacific Specialty Insurance, Affiliate for USD 299.5m.

M2 EQUITYBITES-May 25, 2017-Biglari Holdings to Acquire Pacific Specialty Insurance, Affiliate for USD 299.5m


25 May 2017 - US-based diversified holding company Biglari Holdings Inc. (NYSE: BH) has inked a definitive agreement for a subsidiary of the company to acquire US-based specialty and general insurance provider Pacific Specialty Insurance Co, its Pacific Specialty subsidiary and an affiliated agency, McGraw Insurance, Inc., from shareholders Michael J. McGraw and John M. McGraw, the company said.

Pacific Specialty has been recognized as an industry leader in motorcycle, personal watercraft and residential property insurance.

Biglari Holdings' subsidiary, BHIC Inc., plans to acquire Western Service Contract Corp. (parent of Pacific Specialty) and McGraw Insurance, Inc. for a purchase price of USD 299.5m, consisting of USD 24m in cash payable at the closing of the transaction and USD 275.5m of deferred payments.

USD 175.5m is payable in cash over a ten-year period, and USD 100m is payable by a promissory note that matures upon the death of Michael J. McGraw (or in ten years following the closing should death occur within that time period) for the benefit of the University of Notre Dame, payable at maturity either in securities or in cash, at the election of Biglari Holdings.

The interest during McGraw's lifetime is set at the rate of 6% per annum. The transaction is subject to customary closing conditions, including regulatory approvals. It is anticipated that the transaction will be completed in 3Q17.

Biglari Holdings is a holding company owning subsidiaries engaged in a number of diverse business activities, including media, property and casualty insurance, and restaurants.

All major operating, investment, and capital allocation decisions are made by Sardar Biglari, Founder, chairman and chief executive officer, on behalf of Biglari Holdings and its subsidiaries.

Based in Palo Alto and Anaheim, California, Pacific Specialty serves individuals and small-business owners with specialty and general policies featuring homeowners insurance, personal lines and powersports insurance.

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Publication:M2 EquityBites (EQB)
Date:May 25, 2017
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