Radian Group to Acquire Clayton Holdings for $300 Million-Plus – NMP Skip to main content

Radian Group to Acquire Clayton Holdings for $300 Million-Plus

May 07, 2014

Radian Group has announced that it has entered into a purchase agreement to acquire Clayton Holdings. Under the agreement, Radian Group will pay aggregate cash consideration of $305 million, which includes repayment of Clayton’s outstanding debt, to purchase all of the outstanding equity interests in Clayton, subject to customary purchase price adjustments. Radian Group expects to finance the entire purchase price and related expenses, as well as redeem Radian’s $54.5 million principal amount of outstanding debt due in June 2015, through public issuances of both debt and equity. In 2013, Clayton had annual revenue of $135.0 million and net income of $9.1 million. Included in expenses was the non-cash amortization of intangible assets of $10.8 million. “Radian’s strong financial performance in the first quarter along with today’s acquisition announcement represent our team’s success in executing on our strategic vision – to emerge from the downturn as a stronger company and to grow and diversify for future success,” said Radian’s Chief Executive Officer S.A. Ibrahim. “We’ve had outstanding success in strengthening our mortgage insurance franchise and returning to profitability. We look forward to continuing down this path, while also taking a step to help diversify our revenue stream and position Radian for new opportunities as the U.S. housing market evolves.” From an accretion/dilution standpoint, the company expects that the transaction will be approximately breakeven in 2014, and will be modestly accretive excluding the non-cash amortization of intangible assets. The acquisition is expected to close during the summer of 2014, subject to satisfaction of customary closing conditions. After the transaction is complete, Clayton will become a subsidiary of Radian Group, therefore cash flows from Clayton are expected to provide an unregulated source of funds to Radian Group. Following the completion of the transaction, Clayton will serve as a complement to Radian’s existing mortgage-related products and services. Clayton is headquartered in Shelton, Connecticut, and employs approximately 700 people. Clayton Chief Executive Officer Paul Bossidy, President and Chief Operating Officer Joseph D’Urso and the Clayton management team have built a strong, market-leading franchise in each of the mortgage services areas where they participate. As part of Radian, they will focus on serving their clients and growing their business, as well as exploring additional opportunities to market new and existing services to Radian’s established customer base. “The future looks bright for Clayton and we are delighted to become part of the Radian team,” said Clayton’s Chief Executive Officer Paul T. Bossidy. “Radian and Clayton are leaders in our respective industries, and we look forward to working together to create new opportunities for growth and expansion that we simply could not achieve on our own.”
May 07, 2014