MEMPHIS, Tenn.—Sedgwick CMS Holdings Inc. has agreed to acquire third-party administrator CompManagement Inc. and its affiliated companies in a deal valued at nearly $200 million.
The acquisition was announced Tuesday by Sedgwick and its owners, Jacksonville, Fla.-based Fidelity National Financial Inc. and private equity firms Thomas H. Lee Partners and Evercore Partners. The deal is the second for Sedgwick in less than a month: In May, it bought Calabasas, Calif.-based claims services company VPA Inc.
Under the terms of the agreement, Sedgwick would pay CompManagement’s parent company, Security Capital Corp. of Greenwich, Conn., approximately $191.5 million for the Dublin, Ohio-based company and its affiliated firms.
Among the companies Sedgwick would acquire are: CompManagement, a TPA focused on workers compensation, disability and employee absence claims administration; Octagon Risk Services Inc., a TPA specializing in workers comp, medical professional liability, general liability and employment practices liability claims; and CompManagement Health Systems Inc., an Ohio-certified managed care company. The CMI companies had a combined revenue of $145 million last year, Sedgwick said in a statement.
“This acquisition brings a robust and diverse array of specialized capabilities to Sedgwick CMS,” David A. North, Sedgwick’s president and chief executive officer, said in the statement. “We are very pleased to welcome the 1,350 people of the CMI Group to Sedgwick CMS,” he added, and “we look forward to working with their talented management team in implementing plans to deliver additional benefits to clients, career opportunities to our new colleagues, and returns to our shareholders.”
The capabilities of the CMI companies will help Sedgwick enter new businesses, such as services for managed care organizations and medical malpractice claims administration, while helping to increase the company’s presence in markets such as association programs and regional employers, Mr. North said in the statement.
The closing of the deal is subject to regulatory approval, but is expected to take place either late in the third quarter or early in the fourth quarter of 2006, Sedgwick said.
