JASPER, Ind. - German American Bancorp, Inc. (NASDAQ:GABC) has completed the sale of its insurance subsidiary, German American Insurance (GAI), to Hilb Group, a top-tier insurance brokerage firm. The deal, sealed at $40 million in cash, yields an after-tax gain of about $27 million, net of transaction-related expenses.
The purchase price is a significant multiple of GAI's financials, equating to roughly four times its 2023 revenues and 24 times its after-tax earnings from the same year. The transaction is expected to provide German American Insurance's customers continued access to premium insurance products and services.
D. Neil Dauby, German American Bancorp's Chairman and CEO, remarked on the strategic sale, emphasizing the value realized from the transaction and the promising future for GAI under Hilb Group's umbrella. Diana Wilderman, President of GAI, will retain her leadership role, and the company will operate as German American Insurance – A Hilb Group Company in southern Indiana and Kentucky.
Ricky Spiro, CEO of the Hilb Group, expressed enthusiasm for the acquisition, which aligns with the firm's growth strategy and commitment to community service. The Hilb Group, recognized as a Top 25 US Insurance Agency, has consistently ranked as an Inc. 5000 fastest-growing private company and is supported by The Carlyle Group (NASDAQ:CG), a global investment firm.
This acquisition not only retains all GAI employees but also establishes an ongoing referral relationship, ensuring that German American Bank customers have access to top-notch insurance brokerage services. The Hilb Group, founded in 2009 and headquartered in Richmond, Virginia, operates over 125 locations across 29 states.
Piper Sandler & Co. acted as the financial advisor, and Dentons Bingham Greenebaum LLP provided legal counsel to German American in the transaction. German American Bancorp, Inc., based in Jasper, Indiana, provides banking services through German American Bank across multiple counties in Indiana and Kentucky.
This article is based on a press release statement.
InvestingPro Insights
Amidst the strategic sale of German American Bancorp's insurance subsidiary, German American Insurance, to Hilb Group, the financial metrics of German American Bancorp (NASDAQ:GABC) reveal a mixed picture. With a market capitalization of $938.92 million and a price-to-earnings (P/E) ratio standing at 11.16 as of the last twelve months up to Q1 2024, the company presents an investment profile that balances value and growth prospects.
InvestingPro data highlights a dividend yield of 3.41% as of mid-2024, which is notably attractive for income-seeking investors, especially considering that German American Bancorp has raised its dividend for 11 consecutive years, and has maintained dividend payments for 32 consecutive years. This consistent return to shareholders is a testament to the company's financial stability and commitment to its investors.
However, not all signals are positive. Analysts have revised their earnings expectations downwards for the upcoming period, and the company suffers from weak gross profit margins. Moreover, while the company has been profitable over the last twelve months, its net income is expected to drop this year. These factors may warrant caution for potential investors.
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With six more InvestingPro Tips available, investors can gain a comprehensive understanding of German American Bancorp's financial health and future outlook. The strategic sale of its insurance subsidiary could be a pivotal moment for the company, and these insights will help investors make informed decisions.
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