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."

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