Verisk/Eagleview Transaction Delayed by FTC Review
In January, Verisk Analytics, a leading supplier of computer software (“Xactimate”) used by the property insurance industry to estimate replacement costs for insurance claims, announced its intention to acquire Eagleview Technology, an aerial imagery provider. Eagleview’s imagery, which covers over 90% of all U.S. structures, assists insurers in calculating roof measurements when building are damaged by hurricanes, tornados and other catastrophic events, and thus its products are expected to enhance Verisk’s offerings for insurers. The announced value of the deal was $650 million and, when announced, the parties stated that the transaction was expected to close by July.
However, in April, Verisk announced that the FTC was investigating the potential competitive implications of the deal, and in April the FTC issued a “Second Request” to the parties. The issuance of a Second Request bars merging parties from completing their transaction while the FTC conducts its review, and requires the parties to submit a significant amount of additional information for the FTC’s consideration. Accordingly, the transaction was placed on hold pending the resolution of the FTC’s investigation.
At the time that the Second Request was announced, Verisk stated that it still intended to complete the transaction by July. Subsequently, the target closing date was pushed back to September 30, as the FTC investigation continued. Most recently, on September 29, Verisk announced that the FTC was still investigating the acquisition, and that the transaction was now targeted for an end of year closing. In announcing the further delay, Verisk’s CEO stated that “We continue to believe that aerial imagery is important to our insurance customers and their ability to provide cost-effective solutions to their customers,” and that Verisk was “hopeful that [it] could find a satisfactory conclusion to [its] process to acquire Eagleview.”
While the FTC’s investigation process is confidential, and neither Verisk nor Eagleview has announced the nature or extent of the FTC’s concerns about the transaction, the length of the FTC’s investigation suggests that it must believe the transaction presents some potential competitive concerns. If so, the FTC and the parties are likely seeking to negotiate some sort of resolution that would address the FTC’s concerns while still letting the transaction proceed; alternatively, failing such agreement, it would not be surprising if the FTC filed an action seeking to enjoin the parties from consummating their deal.
(The other alternative, of course, would be a conclusion by the FTC that the deal, as proposed, does not present any competitive concerns.) Given Verisk’s claims that 22 of the 25 largest property insurers currently utilize its products, the next steps in the FTC’s review could be significant for the property insurance industry as a whole. Stay tuned.