NEW YORK (The Deal) -- Canadian financial institution Fairfax Financial Holdings announced Tuesday it had acquired pet insurer Pethealth for C$100 million ($92 million), expanding its footprint in the burgeoning field of pet-related animal health.
"Fairfax had some business in that space and they've added to that business with this deal," said RBC Capital Markets analyst Mark Dwelle, who covers Fairfax, by phone. "It sort of came out of nowhere, but most of [Fairfax's] deals are very opportunistic. The price seemed reasonable and I think they looked at it and found value."
In May 2013, Toronto-based Fairfax acquired Hartville Group, of Canton, Ohio, which also provides pet insurance, for undisclosed terms. "I suspect [Pethealth] will be rolled into that existing business," Dwelle said. "It seems like a deal to add another client book."
The C$2.79 per share in cash that Fairfax will pay represents a 26% premium over Oakville, Ontario-based Pethealth's Aug. 29 closing price of C$2.21 per share and a 69% premium to Pethealth's closing price of C$1.65 per share on Aug. 15, which was the day before it went on the block.Shares of Pethealth, which trade on the Toronto Stock Exchange as PTZ, jumped about 26% to C$2.78 per share Tuesday.