The Amwins and Dragoneer consortium’s offer for Steadfast is more likely to proceed than the private equity bid for AUB Group that fell over last year, analyst group Jarden says.

The pair have offered $6 a share for Steadfast, valuing the company at $7.7 billion including equity and debt.

Steadfast has allowed an eight-week exclusive due diligence period for the indicative offer to be firmed and says it intends to support the bid subject to acceptable terms and absent a superior rival proposal.

Under the proposal, Dragoneer would take over Steadfast’s retail brokerage business and Amwins its underwriting agencies.

Last year, Swedish private equity firm EQT partnered with CVC Asia-Pacific on a bid for AUB that would have valued the group at more than $5 billion, but it dropped the proposal after due diligence.

“Amwins is a strategic trade buyer taking underwriting agencies it can plug into its US wholesale platform, while Dragoneer is a decade-long Amwins backer, rather than a financial sponsor chasing a quick return, so each party is buying the asset it wants, which should sharply reduce the post-diligence cold feet that sank EQT/AUB,” Jarden says in a research report.

The analyst adds that, “tellingly”, Steadfast’s Robert Kelly has abandoned plans to step down as CEO and says he will stay on, which it reads as a sign of close alignment with the bidders.

The offer is at a 51.9% premium to the $3.95 closing price before the announcement, but this is a multiple below the AUB bid and the Ardonagh acquisition of PSC.

Jarden says if the deal goes ahead, the consortium would be capturing Steadfast at a cyclically depressed multiple.

Morningstar says the offer is not overly generous, but there is a good chance it proceeds given the board has shown support.

“Rival bidders could still emerge, but given the recent experience with AUB, we don’t think baking in upside from higher bids is warranted,” analyst Nathan Zaia said.

“It would be disappointing to see another high-quality business leave the ASX boards. The company is performing well and the share price weakness has largely been driven by AI uncertainty, which we think is overstated.”

Steadfast says the proposal follows a period of engagement with the consortium, during which previous indicative proposals were made at $5.50 and $5.83.

The shares were trading at $5.17 this morning.

---

From the latest Insurance News magazine: We sit down for a wide-ranging interview with Lloyd's chief Patrick Tiernan

---