The Goldman Sachs Group Inc.
) scrapped the cash deal announced in May 2013 to buyout
), an insurance software provider. The decision came on the back
of U.S. regulators' investigations into allegations from
short-sellers who accused Ebix of furnishing inaccurate financial
Earlier, Goldman had agreed to buy Ebix for $820 million,
including the latter's outstanding debt. As per terms of the
deal, it was agreed that shareholders of Ebix were to be paid $20
per share in cash by Goldman.
Further, as per the "go-shop" provision contained in the merger
agreement, Ebix is still open to imploring other strategic
alternatives from third parties. Therefore, Ebix's special
committee is on the look out for other potential acquisition
Ebix is a software and e-Commerce services provider to the
insurance and financial industries. Products provided by the
company include data exchanges, agency systems, carrier systems
and custom software development.
Though the company denied such accusations, yet its stock price
has gone down 37% since the first charge was levied against it in
Mar 2011. However, no termination fees will be paid by either of
Earlier, Goldman was extremely confident regarding Ebix and
believed that the company had no involvement in such
malpractices. Therefore, Goldman was contended with the deal and
was hopeful of taking Ebix to new heights and maximizing its
However, since the investigations began, Goldman decided against
moving forward with the transaction as the deal was planned to be
financed with its own capital. Therefore, amid ongoing
fundamental pressures and regulatory obligations in the banking
sector, we believe Goldman took the right decision by not
entering into an ambiguous deal.
Currently, Goldman carries a Zacks Rank #2 (Buy). Other major
banks with a Zacks Rank #2 that are worth considering include
JPMorgan Chase & Co.
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