Enstar Group Ltd has entered into a definitive merger agreement under which Sixth Street, the San Francisco-headquartered global investment firm, will acquire the Bermudian-based insurer for $5.1 billion.

The company said Liberty Strategic Capital, JC Flowers & Co LLC, and other institutional investors are also participating in the transaction, which will see Enstar shareholders receiving $338 in cash per ordinary share of Enstar, payable upon closing of the transaction.

Enstar said the consideration represents a premium of approximately 8.5 per cent to the 90-day volume weighted average price of the company shares as of July 26, the last trading day prior to the announcement of the transaction, and 6.9 per cent to the 60-day VWAP as of the same date.

Following close, the company said, Enstar will maintain its current operations and business strategy.

“Over the past 30 years, Enstar has built a strong position in the legacy market founded on our exceptional scale and track record, pricing and claims expertise, and entrepreneurial culture,” said Enstar’s chief executive officer Dominic Silvester.

“This transaction provides a full liquidity event for shareholders and is a testament to the strength of our team. We believe this is the best next step for our shareholders and we look forward to this exciting new chapter.”

Michael Muscolino, co-founder and partner at Sixth Street, said: “Enstar has a proven track record of delivering innovative legacy P&C solutions and capitalising on attractive opportunities in the reinsurance market, while maintaining a conservative balance sheet and strong risk management culture.

“As an existing investor in Enstar, we have a deep respect for the business Enstar’s management team has built and look forward to continue supporting the company’s current strategy.”

The transaction, which has been unanimously approved and recommended to its shareholders by Enstar’s board of directors, is expected to close in mid-2025, subject to approval by Enstar’s shareholders, regulatory approvals, and other customary closing conditions.

The transaction is fully financed, with the full amount of equity being provided by Sixth Street, together with its co-investors, and Enstar agreeing to return approximately $500 million from its balance sheet to its shareholders as part of the total $338 in cash per ordinary share received by shareholders of Enstar.

The agreement includes a 35-day “go-shop” period expiring on September 2, which permits Enstar's board of directors and advisers to solicit alternative acquisition proposals from third parties.

Upon completion of the transaction, Enstar's common stock will no longer be publicly listed, and Enstar will become a privately-held company. It will continue to operate under the Enstar name.

Enstar, which announced second quarter net income attributable to ordinary shareholders of $126 million (Q2 2023: $21 million), also said that president, Orla Gregory, will step down at the end of the year after 21 years with the company.

Ms Gregory will focus on leading the company’s preparations for closing the merger and its transition to a privately held business, as well as continuing to serve as a director and executive leadership team member until December 31.

Mr Silvester said: “Orla has spent her career in dedicated service to Enstar. She is a dynamic executive who has contributed massively to the strong leadership, culture, and brand built at Enstar. We are appreciative that she will be involved in transitioning us into our next chapter. We will miss Orla tremendously.”

Ms Gregory said: “I am very proud of the achievements by so many during my time at Enstar. With great leadership in place, and significant opportunities in the legacy space, I have no doubt that Enstar will continue to excel.

“Today’s transaction is an exciting evolution, and I look forward to working with the team in preparation for closing. I thank Dominic for the great opportunities I’ve had and all of my colleagues for their dedication and support.”