Kaye Scholer Client Onex Sells The Warranty Group to TPG for Approximately $1.5 Billion

Canadian private equity firm Onex Corporation (TSX; OCX) today announced that it has signed a definitive agreement to sell The Warranty Group, Inc., a leading global provider of warranty solutions and related programs, to private equity firm TPG for an enterprise value of approximately $1.5 billion.  Kaye Scholer is advising long-term client Onex and The Warranty Group on legal matters related to the transaction.

Under the terms of the agreement, TPG will acquire The Warranty Group and its operating units including Virginia Surety Company, London General Insurance Company, and Resource Automotive. The transaction is expected to close in the third quarter of 2014, and is subject to customary closing conditions and regulatory approvals.

The Kaye Scholer team is being led by Senior Corporate Partner Joel Greenberg, Partner Thomas Yadlon and Associate Tracy Romano. The team also includes Partners Jeffrey London, Laurie Abramowitz, Chris Peterson, Sheryl Gittlitz, and Sebastian Jungermann, Counsels Gregg Benson and Peter Danias, and Associates Sharon Obialo, Brian Witkowski, Connie Ericson and Stephen Sandiford.

Below are copies of the press releases issued by Onex and TPG earlier today:

 Onex to Sell The Warranty Group for $1.5 billion
All amounts in U.S. dollars unless otherwise stated

Toronto, March 21, 2014–Onex Corporation (“Onex”) (TSX: OCX) and its affiliates (the “Onex Group”) today announced they have agreed to sell The Warranty Group (“TWG”) to an affiliate of TPG Capital for an enterprise value of approximately $1.5 billion, including earnings the business generates from December 31, 2013 through closing. The transaction is expected to close during the third quarter of 2014 and is subject to customary closing conditions including regulatory approval. 

The Onex Group made a $498 million equity investment in TWG in November 2006. Upon completion of the transaction, the Onex Group will have received proceeds of approximately $1.5 billion, including prior distributions of $403 million, which will result in a multiple of invested capital of approximately 3.1 times and an 18% rate of return. Onex’ portion of the proceeds would be approximately $385 million, including carried interest. 

“This is a very good outcome for Onex’ shareholders and our limited partners,” said Bobby Le Blanc, a Senior Managing Director of Onex. “TWG’s performance is a testament to our approach of identifying attractive carve-out opportunities and partnering with management teams to build industry-leading businesses and improve operational efficiency on a standalone basis.” 

“We wish Tom Warsop and the rest of the TWG management team continued success,” added Mr. Le Blanc. “TWG’s management has created significant value for Onex for which we are grateful.” 

About Onex
 
With offices in Toronto, New York and London, Onex is one of the oldest and most successful private equity firms. Onex acquires and builds high-quality businesses in partnership with talented management teams. The Company has approximately $19 billion of assets under management, including $6 billion of Onex capital, in private equity, credit securities and real estate. Onex invests its capital directly and as the largest limited partner in each of its Funds. 

Onex’ businesses have assets of $44 billion, generate annual revenues of $33 billion and employ approximately 232,000 people worldwide. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX. For more information on Onex, visit its website at www.onex.com. The Company’s security filings can also be accessed at www.sedar.com. 

This news release may contain forward-looking statements that are based on management’s current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Onex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

TPG to Acquire The Warranty Group, Inc.

FORT WORTH, Texas—TPG, a leading global private investment firm, announced today that it has signed a definitive agreement to acquire The Warranty Group, Inc., a leading global provider of warranty solutions and related programs, from Onex Corporation (TSX: OCX), for an enterprise value of approximately $1.5 billion.

Under the terms of the agreement, TPG will acquire The Warranty Group and its operating units including Virginia Surety Company, London General Insurance Company, and Resource Automotive. The transaction is expected to close in the third quarter of 2014, and is subject to customary closing conditions and regulatory approvals.

“We are excited to partner with TPG, which will provide our company with the global resources and deep financial industry expertise needed to expand both internationally and domestically,” said Thomas W. Warsop, III, President and Chief Executive Officer of The Warranty Group.“We look forward to working with the TPG team to identify additional growth opportunities, while providing our clients and their customers with an even more robust menu of solutions.”

“As the worldwide leader in full service underwriting and administration of extended warranties, and with its unique business model, The Warranty Group is well positioned to take advantage of current and future market trends,” said Eric Leathers, Managing Director at TPG. “Tom and his team have done a great job building the business, and we believe with our additional capital, operational expertise and global relationships, we can accelerate the company’s growth.”

J.P. Morgan Securities LLC served as the sole M&A advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as outside counsel for TPG. Goldman Sachs & Co., Morgan Stanley & Co. LLC, and Citigroup Global Markets Inc. acted as financial advisors, and Kaye Scholer LLP served as outside counsel for The Warranty Group and Onex.

About The Warranty Group

Celebrating 50 years of industry leadership, The Warranty Group is one of the world's premier global providers of warranty solutions and related benefits, with operations in more than 35 countries and approximately 1,800 employees. With Virginia Surety Company and London General Insurance as our wholly-owned insurance companies, The Warranty Group is a single-source solution that provides underwriting, claims administration, and marketing expertise to some of the world's leading manufacturers, distributors, and retailers of consumer goods including automobiles, homes, consumer appliances, electronics, and furniture, as well as specialty insurance products and services for financial institutions. For more information, visit www.thewarrantygroup.com.

About TPG

TPG is a leading global private investment firm founded in 1992 with over $59 billion of assets under management and offices in San Francisco, Fort Worth, Austin, Beijing, Chongqing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, São Paulo, Shanghai, Singapore and Tokyo. The firm has extensive experience with public and private investments around the world. TPG has deep financial services expertise across the globe, having made investments in companies such as American Beacon Advisors, Ariel Reinsurance, Decision Insight Information Group, Endurance, Fidelity National Information Services (FIS), LPL Financial Services, ProSight Specialty Insurance, Shenzhen Development Bank and Shriram Transport, among others. For more information visit www.tpg.com.