Travel insurance group Cover-More is raising $73.3 million through a rights share offering to part fund its acquisition of US-based Travelex Insurance Services.
Cover-More on Tuesday said it had agreed to buy the Travelex business for $138 million, giving it a strong presence in North America.
Travelex isthethirdlargestretailtravelinsurancespecialistintheUS market, with gross written premiums of $US124 million ($A162 million) and earnings of $US9.5 million for the year to June 30.
"Travelex isanexcellentstrategicfit for Cover-More,providing acceleratedentryinto NorthAmericaandaplatformforfurtherexpansion," Cover-More said.
Based on the FY16 financials, the deal is likely to be earnings-per share accretive in the low single digits, Cover-More said. It expects the combination of the two businesses to unlocksubstantialincrementalvalue through cost synergies and additional revenue sources.
It expects the transaction to be completed before the end of the year.
The rights share offering will take care of nearly half the deal value, with the balance to be funded through bank debt. The company did not disclose the offer price for the raising, saying it would be decided through an institutional bookbuild.
Shares in Cover More, which have been in a trading halt since Monday, last traded at $1.44 each.
The company also reaffirmed its full-year earnings guidance range of $48.1 million to $52.9 million, based on trading in the first two months of this fiscal year. It will provide a further trading update at its annual general meeting in November.
