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KKR Acquires Sedgwick Claims in $2.4B Deal

NEW YORK (The Deal) -- Insurance processing firm Sedgwick Claims Management Services is changing hands for the third time since 2006, agreeing to be acquired by private equity firm Kohlberg Kravis Roberts & Co. (KKR) for $2.4 billion in cash.

Memphis-based Sedgwick said that KKR along with management would acquire the firm from owners Hellman & Friedman LLC and Stone Point Capital LLC. Equity is being provided by KKR's North American XI fund, with UBS Securities LLC, Deutsche Bank Securities, Morgan Stanley, Mizuho, KKR Capital Markets LLC and MCS Capital Markets LLC on board to provide financing for the transaction.

Sedgwick is a provider of claim management systems specializing in tools that manage workers' compensation, disability, managed care, liability, fraud and warranty claims.

On an annual basis, Sedgwick handles more than 2.1 million claims and has fiduciary responsibility for claim payments totaling more than $11 billion.

KKR head of financial services investments Tagar Olson in a statement called it a "critical time for employers as they adjust to an evolving health care delivery model, the shifting demographics of the workforce and a multitude of additional challenges," and said that Sedgwick is well positioned to capitalize from these changes.

"Sedgwick has an exceptional management team, a strong track record of innovation and the technology-driven solutions to address these challenges," Olson said.

This is KKR's second claim management deal in recent months, following its September agreement to acquire San Diego-based Mitchell International from Aurora Capital Group for more than $1 billion.

Sedgwick CEO David A. North said "we couldn't ask for a better partner in the next stage of Sedgwick's evolution," saying that KKR "has an exceptional record of investing in financial services companies and will be a valuable strategic resource for our organization."

Sedgwick was acquired by Stone Point and Hellman in 2010 for $1.1 billion from Fidelity National Financial Inc., Thomas H. Lee Partners LP and Evercore Capital Partners, which had acquired the company in 2006 for $635 million. Stone Point has owned the business twice. The firm along with insurer Marsh & McLennan Cos. owned Sedgwick prior to its 2006 sale to the Fidelity National-led group.

Simpson Thacher & Bartlett LLP and Latham & Watkins LLP provided legal counsel to Sedgwick and KKR, respectively. Sedgwick management was represented by a Willkie Farr & Gallagher LLP team that included partners Jordan Messinger and Thomas Mark.

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