The St. Paul Buying Healthcare Risk Management Firm
The St. Paul Companies announced a definitive agreement to acquire MMI Companies, a Deerfield, IL-based provider of insurance products and consulting services, for $10 per share in cash, or $200 million. The St. Paul also will assume approximately $120 million of current MMI debt. The transaction is expected to close in the second quarter of 2000, subject to regulatory approvals.
The St. Paul says the combination "creates the largest global integrated provider of insurance and risk management services for the healthcare industry, generating approximately $1 billion annually in premiums and fees from healthcare customers."
MMI is an international risk services company with more than 20 years of experience providing products and services for the healthcare industry. Its products and services include clinical risk management and operational consulting services, and insurance and reinsurance in the United States and London markets.
``MMI's businesses represent a solid strategic fit with our own medical services risk management capabilities,'' said Douglas Leatherdale, The St. Paul's chairman and chief executive officer. ``The St. Paul will be better positioned to deliver superior products and services to a full range of clients, from the single-physician practice to the world's premier healthcare institutions.''
Leatherdale said a key strategic benefit resulting from the acquisition would be the ability to combine The St. Paul's franchise among small and mid-sized healthcare providers with MMI's base of larger accounts, "creating a company with significant presence in every customer segment, from individual physicians to large healthcare institutions," he said.
``Our recognized expertise in the field of healthcare risk management makes us uniquely qualified to realize the full value of the MMI franchise,'' Leatherdale said.
Frederick Becker, MMI chairman and chief executive officer, said, ``We are pleased to undertake this transaction. Integrating The St. Paul's leadership position in healthcare insurance services with MMI's international reputation in healthcare risk modification services creates a world-class differentiated product.
``The St. Paul has created a true ‘center of excellence' in the healthcare insurance marketplace at a point in time when the healthcare industry needs it the most," he said. "The combination will benefit shareholders, employees, customers, agents and brokers.''
The St. Paul expects the transaction to be operating earnings-neutral in 2000 and modestly accretive in 2001 and future years. The expectations are based on anticipated revenue growth from the combination and annual cost savings, estimated at approximately $15-20 million. A team of key executives from both companies will develop plans for optimal integration and maximum cost savings.
UnionAmerica, MMI's U.K.-based insurance and reinsurance company, will continue to operate as a stand-alone operation.