Markel acquires Abbey Protection in a £116.5m deal

Markel has reached an agreement with Abbey Protection to buy the legal expenses insurance broker in a £116.5m cash deal.

The offer will see shareholders receive 115p per share as well as the 2.4p per share dividend announced by Abbey Protection on 4 September 2013.

This values the company at £116.5m, equivalent to 9.3 times enterprise value-to-earnings before interest, tax and depreciation (EBITDA) and a price-to-earnings multiple of 14.5 times.

Markel International’s William Stovin said: “Our financial and underwriting strengths and our established relationships with UK SME customers fit well with the Board of Abbey Protection’s objectives for the further development and expansion of its business. From our first meeting it was clear that there was a strong cultural fit between our organisations and we are looking forward to working with the Abbey Protection management to make the best use of resources we bring to support the continued development of this high-quality business.

“It’s our expectation that Abbey Protection will continue to operate under its own successful brand, while our capital and risk appetite will enable it to retain more underwriting risk and to explore growth initiatives currently beyond its reach. Abbey Protection will be a significant addition to our UK retail business.”

Abbey Protection chairman Tony Shearer said: “”As Abbey Protection looks to the next stage of its growth strategy, the board of Abbey Protection believes that now is the right time for a change of ownership. Accordingly, the board of Abbey Protection believes that the acquisition by Markel gives Abbey Protection an exciting opportunity to build a platform for further growth through Markel Corporation’s scale and financial strength, and Abbey Protection’s specialist products and distribution network.

“Markel Corporation is a highly regarded insurer with an international reputation and, like Abbey Protection, has a strong track record in providing specialist insurance products to SMEs. The Board of Abbey Protection believes that the acquisition represents the most attractive outcome for our shareholders and will enhance Abbey Protection’s business in the interests of our customers, partners and employees, thus securing the group’s long-term future.”

More to follow.