U.S.I. Pays $123.9m For SGP
By Mark E. Ruquet
NU Online News Service, Feb. 10, 4:20 p.m. EST?U.S.I. Holdings said it paid $123.9 million for it's acquisition of Dallas-based Summit Global Partners, a $10.4 million increase over what it anticipated it would cost.[@@]
In January, the Briarcliff Manor, N.Y.-based broker said it would pay $113.5 million for SGP, which it said at the time could increase or decrease subject to closing term adjustments.
In an 8-K filing yesterday with the Securities and Exchange Commission, USI said it paid $69.3 million in cash and $26.6 million in common stock to SGP stockholders, and assumed $28 million in debt and other liabilities.
USI said the agreement was increased by $10.4 million to cover compensation agreements. SGP signed 40 sales professionals to compensation agreements similar to ones USI has in place. Of the $10.4 million, $6.8 million went to those who signed the agreement. Key executives with SGP were also required to sign new employment agreements and U.S.I said it made a one time payment of $2.4 million in connection with those agreements.
USI has said it expects the merger to contribute $66 million in revenue annually to the firm.
David Lewis, an analyst with Atlanta-based Suntrust Robinson Humphrey, reaffirmed his opinion that the SGP merger is a good deal for USI and will add value to the firm over the next 3 to 5 years.
"This brings USI to the next level as a holding company," he said.
Suntrust Robinson owns no interest in USI. It has done banking business with the firm and received underwriting fees within the past 12 months.
Last year, among its acquisitions, USI purchased Los Angeles-based Dodge, Warren Peters, a firm that is expected to produce $25 million in revenue for USI.
In December, USI issued lower earning guidance for 2004, saying it expected earnings to come in at between 96 cents to 98 cents a share, down from $1.02 to $1.07 a share it announced earlier in 2004. The company also laid-off 1 percent of its workforce, about 2,500 employees, and planned to sell-off some operations.
The softening market and overconfidence in the company's ability to attract new business were blamed for the move.
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