NEW YORK - Ambac Financial Group, Inc. (NYSE:AMBC), a specialty property and casualty insurance firm, has entered into a definitive agreement to divest its legacy financial guarantee businesses to Oaktree Capital Management, L.P.
The deal, valued at $420 million in cash, was signed on Tuesday and includes the sale of Ambac Assurance Corporation and Ambac UK. Moreover, Oaktree will obtain warrants to purchase up to 9.9% of Ambac's common stock at an exercise price of $18.50 per share.
The transaction is a strategic move by Ambac to complete its transformation into a dedicated P&C insurance platform, a vision outlined by the company three years prior. "The sale of our legacy financial guarantee business is the final step in that transition," stated Claude LeBlanc, President and CEO of Ambac. He expressed that this move allows the company to concentrate on establishing a profitable P&C platform to deliver sustained shareholder value.
Oaktree, a global investment manager with $192 billion in assets under management, views the acquisition as a partnership that supports Ambac's successful transformation. According to Oaktree Managing Director Greg Share, the partnership will continue the de-risking of the insurance liabilities initiated by AAC and AUK.
The acquisition is subject to customary closing conditions, including regulatory approvals in the United States and the United Kingdom, as well as approval from Ambac's shareholders. The transaction is anticipated to close between the fourth quarter of 2024 and the first quarter of 2025.
Ambac has enlisted Moelis (NYSE:MC) & Company LLC as its exclusive financial advisor, with Debevoise & Plimpton LLP providing legal counsel. Oaktree has engaged BlackRock (NYSE:BLK)'s Financial Markets Advisory team as its valuation advisor and Kirkland & Ellis LLP as legal counsel.
The announcement comes ahead of Ambac's investor conference call, hosted by CEO Claude LeBlanc and CFO David Trick, scheduled for today at 8:30 a.m. ET. The call aims to discuss the company's latest developments, including the sale of its legacy businesses.
The information in this article is based on a press release statement from Ambac Financial Group, Inc.
InvestingPro Insights
As Ambac Financial Group, Inc. (NYSE:AMBC) embraces a significant shift in its business strategy with the sale of its legacy financial guarantee businesses, the company's financial health and future prospects are of paramount interest to investors.
According to InvestingPro data, Ambac currently holds a market capitalization of $779.23 million. This valuation is complemented by a Price/Earnings (P/E) ratio of 12.67, indicating the company's earnings relative to its share price are reasonably valued in the market as of the last twelve months leading up to Q1 2024.
Investors may also find Ambac's P/E Ratio (Adjusted) of 13.15 noteworthy as it reflects adjustments for the company's expected future earnings growth. Furthermore, the company's impressive revenue growth of 68.33% in Q1 2024, compared to the previous quarter, suggests that Ambac's operational performance is on an upward trajectory.
Two InvestingPro Tips highlight key aspects that investors should consider:
1. Ambac is anticipated to be profitable this year, with analysts predicting a positive net income growth. This outlook aligns with the company's strategic move to focus on its P&C insurance platform, potentially leading to sustained shareholder value.
2. The company has demonstrated a strong return over the last month, with a 17.45% price total return, underscoring investor confidence in Ambac's recent decisions and future direction.
For those seeking a deeper analysis, there are an additional 6 InvestingPro Tips available, offering insights into Ambac's financials and market performance. These tips can be accessed through https://www.investing.com/pro/AMBC, providing investors with a comprehensive understanding of the company's position.
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