Ebix moves to Acquire Insurance Tech Solutions Provider, Patriot National, Inc.

Ebix, Inc., a leading international supplier of On-Demand software and E-commerce services to the insurance, financial and healthcare industries, has announced that it has sent a letter to the Board of Patriot National, Inc., a provider of technology-enabled outsourcing solutions for the insurance industry, outlining its offer to acquire 100% of the outstanding stock of Patriot National for $9.50 per share.

The Ebix offer, based on 28.037 million Patriot National diluted shares outstanding, represents a 37% premium to Patriot National's closing share price of $6.92 as of June 14, 2016. The offer contemplates the assumption of Patriot National's receivables, cash and restricted cash and other assets as well as its current and long-term liabilities including notes payable and earn-out liabilities.

For the quarter ended March 31, 2016, Patriot national reported GAAP Revenues of $64.6 million and GAAP Net income of $3.4 million. With Q1 2016 Adjusted EBITDA of $15.6 million, Patriot National recently affirmed its full year 2016 outlook of total fee income of $270-$280 million and Adjusted EBITDA of $73-$78 million. In 2015, Patriot National generated total revenues of $209.7 million, adjusted EBITDA of $51.5 million and a net loss of $5.4 million.

Transaction Rationale:

• Highly Accretive:Ebix's model is to integrate acquired products, services and companies in a highly disciplined and efficient manner, with resulting cash flow and earnings per share being key endpoint metrics. Ebix believes that the combination of the two companies can be highly accretive for the shareholders of the combined post-merger company.
  
• Building Upon an Industry-Leading Technology & Insurance Services Platform: Ebix has built an extensive portfolio of insurance related products, services and deep domain expertise that serves over 16,000 clients in 50+ countries with more than 500,000 users. The Ebix management has a few hundred years of experience across all sectors of the insurance services industry, providing strong historical knowledge and excellent working relationships with key insurance brokers, carriers and other insurance ecosystem service providers. The addition of Patriot National's workers compensation insurance technology and outsourced services will complement and strengthen a world leading insurance domain focused company with an unparalleled repertoire of products and services.
  
• Vision to create the World's largest End-to-End Enterprise Insurance Services Player: The merged entity would become the world's largest provider of straight through processing in the insurance services industry, offering on-demand based front end systems, back end systems, exchanges, strategic consulting and risk compliance services all under one roof.
  
• Expanded International Cross Selling Opportunities: With approximately 3,000 employees located in over 40 offices servicing clients in 50+countries across 6 continents, Ebix provides a truly global platform with "on-the-ground" presence in major insurance markets worldwide. Global offices are staffed with local nationals possessing language skills and a deep familiarity with local customs, business norms and regulatory frameworks. A merger further enhances this footprint while providing substantial cross selling opportunities.
  

Ebix intends to pay for at least 55% of the purchase in cash and the balance (45%) in cash or stock, as mutually agreed upon, and expects the transaction to be immediately accretive to earnings per share for Ebix shareholders. Ebix's offer is subject to due diligence and customary regulatory and other closing conditions.