Sixth Street to Acquire Enstar for $5.1 Billion in High-Profile Deal

Investment firm Sixth Street is set to acquire insurer Enstar in a $5.1 billion deal, bolstered by former Treasury Secretary Steven Mnuchin and billionaire J. Christopher Flowers. The insurer announced the agreement on Monday.

Sixth Street, which already holds a nearly 4.7% stake in Enstar, will offer $338 per share in cash. This offer implies about a 3% discount to Enstar’s closing stock price last Friday. Following the announcement, Enstar’s shares dropped nearly 6%.

According to Reuters, this acquisition underscores a growing trend: insurers, with their vast pools of capital from customer premiums, have become attractive targets for private equity and alternative asset managers seeking lucrative buyouts. In a notable example, Truist Financial sold its insurance brokerage business in May to an investor group including Stone Point Capital and CD&R for $15.5 billion.

Such mergers can enhance insurers’ investment returns by leveraging the financial market expertise of private equity firms. Enstar stated that Mnuchin’s Liberty Strategic Capital, J.C. Flowers, and other institutional investors are set to participate in this transaction, which is anticipated to close by mid-2025.

Additionally, Enstar is permitted a 35-day “go-shop” period, ending on September 2, during which it can seek alternative acquisition proposals.

Goldman Sachs is advising Enstar in this deal, while Sixth Street is being advised by Ardea Partners, Barclays, and J.P. Morgan Securities.

Source: Reuters