In keeping with its strategic plan to diversify its offerings, Radian Group Inc., the largest private mortgage insurer in the U.S., is set to purchase Clayton Holdings, a well-known provider of outsourced solutions to the mortgage industry, for $305 million in a cash/stock deal.
The $305 million purchase price includes the repayment of Clayton's outstanding debt, Radian says in a release. It plans to fund the purchase through the sale of 15.5 million shares of its common stock and $200 million in bonds. Goldman Sachs Group Inc. is managing the sale.
The acquisition, which is subject to the usual regulatory approvals, is expected to close this summer, upon which Clayton will become a subsidiary of Radian Group.
As a result, cash flows from Clayton are expected to provide an unregulated source of funds to Radian Group, the company says in its release.
Clayton is headquartered in Shelton, Conn., and employs approximately 700 people. Paul Bossidy, CEO of Clayton, and Joseph D'Urso, president and chief operating officer, will continue in their current roles.
Radian announced the acquisition in its First Quarter 2014 Financial Results report.
The company reports net income of $203 million or $0.94 per diluted share for the first quarter – compared to a net loss for the quarter ended March 31, 2013, of $187.5 million, or $1.30 per diluted share, which included combined losses from the change in fair value of derivatives and other financial instruments of $173.3 million and net losses on investments of $5.5 million.
Currently, Radian has about $162 billion in mortgage insurance in force.
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