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Alignvest to acquire Sagicor Financial in $536M cash-and-stock deal

Canada's Alignvest Acquisition II Corp. has agreed to acquire all the shares of Barbados-based Sagicor Financial Corp. Ltd. in a cash-and-stock deal valued at about US$536 million, the companies said.

Alignvest will acquire the shares at US$1.75 each, a price that values Sagicor at approximately 1.00x book value, 7.8x targeted 2019 net income and 6.5x targeted 2020 net income.

Sagicor shareholders as of the election record date of Dec. 6 will have the option to receive either the cash consideration or Alignvest common shares in an amount based on an exchange ratio of US$1.75 per Sagicor share. They may also opt for a combination of the cash and share considerations. The cash consideration will only be available for up to 10,000 Sagicor shares held by each shareholder as of the record date that continue to be held up to the time of the deal's closing.

All other Sagicor shareholders, meanwhile, will receive the share consideration.

The transaction is subject to approval from the shareholders of both companies and other regulatory authorizations including from the Supreme Court of Bermuda. The deal is expected to close during the first quarter or early in the second quarter of 2019.

Upon closing, Alignvest expects to change its name to Sagicor Financial Co. Ltd. and become a Bermuda company. Sagicor Financial Corp., which has common shares listed on the Barbados Stock Exchange, the Trinidad and Tobago Stock Exchange, and the London Stock Exchange, expects to delist the shares on other exchanges when it lists on the Toronto Stock Exchange as part of the transaction.

Also at closing, Andre Mousseau, the COO of Alignvest, will join Sagicor as group chief financial officer. Upon deal completion, Sagicor's board of directors will be chaired by Tim Hodgson, managing partner of Alignvest Management Corp.

Other board members are expected to include Dodridge Miller, Sir Hilary Beckles, Alister Campbell, Peter Clarke, Monish Dutt, Stephen Facey, Mahmood Khimji, Stephen McNamara, Rik Parkhill and Reza Satchu.

Additionally, Sagicor and Alignvest reached a separate agreement under which Sagicor's insurance subsidiaries will acquire ScotiaLife Jamaica and ScotiaLife Trinidad & Tobago Ltd. The merged Sagicor-Alignvest entity will enter into a 20-year strategic agreement with Bank of Nova Scotia in Jamaica and Trinidad, allowing Scotiabank customers access to a range of insurance products underwritten by Sagicor.

Sagicor said it expects this acquisition to contribute run-rate net income of about US$30 million following closing, which is anticipated to occur in 2020.

Paul Hastings LLP and Blake Cassels & Graydon LLP advised Sagicor on legal matters, while Alignvest was advised by Stikeman Elliott LLP and Dorsey & Whitney LLP. Certain Bermudian legal matters were advised by Conyers Dill & Pearman Ltd. on behalf of Sagicor and by Appleby on behalf of Alignvest.

J.P. Morgan Securities LLC acted as the exclusive financial advisor to Sagicor, while RBC Capital Markets served as exclusive financial advisor to Alignvest.