South African financial services company Alexander Forbes confirmed on Monday it has agreed to sell its international risk services unit to Lockton International Holdings for a Â£67.6 million ($127.5 million).
Alexander Forbes had said earlier on Monday the deal was worth an estimated Â£86 million ($163 million) before taking some outstanding liabilities into account. The cash proceeds from the acquisition will be used to repay existing interest- bearing debt, both in the UK and in South Africa, according to a statement released by Alexander Forbes.
â€œThe transaction benefits us in two ways, first, the proceeds allow us to strengthen our balance sheet significantly by settling interest-bearing debt in the UK and in South Africa, and second ... we can now focus our full attention on the plans we have underway for our remaining operations,â€ Alexander Forbes Chief Executive Peter Moyo said.
Forbes said Â£64.5 million pounds will be paid in cash and Â£3.1 million will be paid in loan notes. This will be issued by Lockton and the loan will bear an 8 percent interest rate and is redeemable by the end of March, 2010.
â€œWe remain committed to our flagship risk and insurance services businesses in Africa, and firmly believe that we will continue to offer our clients the best solutions both locally and internationally through a network of global best-of-breed service providers,â€ Moyo added.
Lockton is one of the largest insurance brokerage firms in the US and the tenth largest retail broker worldwide. Alexander Forbes also said it will continue with discussions concerning a possible deal with private equity parties to obtain the entire issued share capital of the company.