Kohlberg Kravis Roberts & Co. L.P.
) - a private equity investment firm - has decided to buy
Mitchell International Inc. from Aurora Capital Group. Though the
company has recently confirmed the news, the exact value of the
deal is still unknown.
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According to Bloomberg, the deal value could be around $1.1
billion (including debt). The transaction is expected to close by
Mitchell is a software company which was acquired by Aurora in
2007 for $500 million. The latter primarily provides information
and software services to large insurance houses, thereby
executing a major chunk of work for them.
With the increasing popularity of the automated insurance claims
process in the North American market, the demand for software
companies like Mitchell is on the rise. As reported by Reuters
last month, Kohlberg Kravis Roberts was one of the many firms
eyeing Mitchell after the announcement of its divesture by
The investment could be a profitable venture for Kohlberg Kravis
Roberts as insurance is a lucrative sector with scope for
improvisation and upgradation. Once the deal closes, Kohlberg
Kravis Roberts intends to expand the acquired unit globally,
especially in Western Europe and Asia. Moreover, it intends to
double Mitchell's annual revenue of $300 million to $400 million.
For Aurora, this divesture forms part of the company's
streamlining initiative. Aurora has been recently selling off
some of its acquired units at a price higher than the purchase
price. Earlier this year, the company vended its carbonated
drinks gas supplier NuCO2 to Praxair for $1.1 billion (almost
double the price of purchase).
Of late, the auto insurance market is witnessing shrinking claims
due to latest accident avoidance technologies like back-up
cameras. Large companies in the market now have to mould
themselves and venture into new avenues to adapt to the changing
So far, Mitchell primarily focused on the North American market.
Now, once acquired by Kohlberg Kravis Roberts, it will get the
much needed exposure and enhancement.
Merrill Lynch, a part of
Bank of America Corporation
), is Kohlberg Kravis Roberts's advisor for the deal while
The Goldman Sachs Group, Inc.
) is the financial advisor of Mitchell.
Currently, Kohlberg Kravis Roberts carries a Zacks Rank #3
(Hold). A better performing stock is
The Blackstone Group L.P.
) with a Zacks Rank #2 (Buy).