Private equity firm KKR & Co LP (KKR.N) has agreed to buy car and property claims software company Mitchell International Inc from Los-Angeles based buyout firm Aurora Capital Group, the firms said on Thursday.
The value of the deal was not publicly disclosed but a person familiar with the matter, who requested anonymity discussing financial details, said the transaction valued Mitchell at around $1.1 billion, or 11 to 12 times its adjusted earnings before interest, tax, depreciation and amortization.
Reuters reported last month that KKR was among the firms vying for Mitchell in a sale that Aurora was hoping would fetch up to $1.5 billion. Mitchell is expecting new contracts from clients and factoring them in led to different price estimates, according to people who worked on the deal.
The transaction is expected to close in the fourth quarter.
"We believe that Mitchell represents an attractive investment in a market leader in an important market segment," Herald Chen, KKR's co-head of technology investing group, said in a statement.
San Diego, California-based Mitchell provides information and software services to insurance companies and collision repair facilities, which rely on the company's information to estimate labor times and the cost of replacement parts.
The company processes more than 50 million transactions annually for over 300 insurance companies and over 30,000 collision repair facilities worldwide.
Joined by investors that included General Electric Pension Trust, Aurora acquired Mitchell in 2007 from private equity peer Hellman & Friedman LLC for an undisclosed amount.
The North American market for software and services designed to automate the auto insurance claims process is dominated by a few players - Mitchell, CCC Information Services Inc and Solera Holdings Inc SLH.N, according to Standard & Poor's Ratings Services.
In January, Leonard Green & Partners LP, another buyout firm, acquired CCC from Investcorp, one of the Middle East's largest private equity houses, for more than $550 million.
The person familiar with the matter said that KKR would keep in place Mitchell's chief executive Alex Sun and his management team, which will retain a small equity interest in the company.
Mitchell, which was founded in 1946 but entered the workers compensation sector only recently, will accelerate the development of new products under KKR and seek to enhance its offerings and expand further internationally through acquisitions, the person added.
KKR was advised by BofA Merrill Lynch and Three Ocean Partners on the transaction. Goldman Sachs & Co served as lead financial advisor to Mitchell. William Blair & Co and Guggenheim Securities also advised the company.
(Reporting by Greg Roumeliotis; Writing by Nicola Leske; Editing by James Dalgleish)