Patriot National Inc (NYSE:PN) and Ebix Inc (NASDAQ:EBIX) have reached an agreement whose other details they are still trying to keep secret until after sometime. But the agreement could lead to Patriot selling to Ebix in a transaction that could be worth $475 million.
In the meantime, a special committee of Patriot is trying to evaluate the $475 million takeover offer from Ebix with the aim of seeing if it enhances value for shareholders.
In mid-July, Ebix made an unsolicited offer to acquire Patriot National Inc (NYSE:PN) at a price of $9.50. But the board of Patriot rejected the overture. However, Ebix decided to sweeten its offer and the board of Patriot is now willing to consider. The boosted offer is the one that values Patriot at $475 million and the process of evaluated that offer is in progress.
What’s the value in the deal?
Patriot said that the most it can reveal at this juncture is that its special committee is reviewing the enhanced offer from Ebix. The confidential agreements that the company has signed with Ebix does not allow it to share any more details until the special committee concludes the review of the offer.
But Patriot National Inc (NYSE:PN) has hinted that the offer carries incentives that could cause it agree to the buyout. Among other things, the special committee is see the value in the offer for shareholders after the company’s indebtedness is cleared and transaction expenses paid.
If it turns out that after paying outstanding obligations and meeting related expenses the offer still enhances value for shareholders, Patriot would have no reason to reject it.
Patriot National Inc (NYSE:PN) is mulling selling itself at a time when its boards has also approved a buyback program that would see the company’s outstanding shares reduced by 0.5 million.
Patriot National Inc (NYSE:PN) generated revenue of $210 million and a net loss of $5.4 million in 2015. But in the same year, Ebix that now wants to acquire it generated revenue of $265 million and net income of $80 million.