Ebix Inc. said that it and an affiliate of Goldman Sachs GroupInc. decided to cancel their planned merger after U.S regulatorsstarted an investigation into allegations of misconduct at Ebix, aninsurance software provider.
|Atlanta-based Ebix said it was notified of the investigation ina letter that it received on June 14 from the U.S. Attorney for theNorthern District of Georgia.
|Shares of Ebix tumbled 25 percent in after-hours trade, afterclosing at $19.72 on the Nasdaq on Wednesday.
|“We believe that the allegations in the class action lawsuits,which we have understood to form the basis of these investigationsare without any merit,” Pavan Bhalla, chairman of Ebix's SpecialCommittee of the Board of Directors, said in a statement.
|Ebix has been dogged by allegations from short-sellers aboutinaccuracies in its financial statements. An affiliate in Goldman'smerchant bank had come to Ebix's aid by agreeing to buy the companyfor $743 million last month.
|Goldman Sachs was not immediately available for comment outsideregular business hours.
|The merger agreement is being cancelled without payment of atermination fee by either party, Ebix said.
|Ebix said it intends to continue evaluating its strategicoptions.
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