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USD 1.8 BN DEAL - CF Corporation to Acquire Fidelity & Guaranty Life in Transformative All-Cash Transaction Valued at $1.835 Billion

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CF Corporation to Acquire Fidelity & Guaranty Life in Transformative All-Cash Transaction Valued at $1.835 Billion

CF Corporation to Acquire Fidelity & Guaranty Life in Transformative All-Cash Transaction Valued at $1.835 Billion

PR Newswire

LAS VEGAS and DES MOINES, Iowa, May 24, 2017

LAS VEGAS and DES MOINES, Iowa, May 24, 2017 /PRNewswire/ -- CF Corporation (NASDAQ: CFCO) ("CF Corp."), and Fidelity & Guaranty Life (NYSE: FGL) ("FGL"), a leading provider of fixed indexed annuities and life insurance in the U.S., today announced that their boards of directors have each unanimously approved a definitive merger agreement under which CF Corp. will acquire FGL for $31.10 per share in cash, or a total of approximately $1.835 billion, plus the assumption of $405 million of existing debt. The purchase consideration implies a value of 1.1x adjusted book value[1] as of March 31, 2017. The investor group, which includes the founders of CF Corp., Chinh E. Chu, and William P. Foley, II, funds affiliated with Blackstone (NYSE: BX), and Fidelity National Financial (NYSE: FNF) ("FNF"), will invest approximately $900 million in common and preferred equity to fund the transaction.

FGL is a leading provider of fixed indexed annuities and life insurance products, with approximately $28 billion of GAAP Total Assets and approximately $1.6 billion of adjusted book value1. FGL has grown sales by approximately 10% annually from 2012 to 2016, supported by its long-standing relationships with distribution partners, changing U.S. retirement demographics, and an attractive product value proposition to policyholders.

Following the close of the transaction, FGL will continue to be led by its current management team under Chris Littlefield as President and CEO. FGL will remain headquartered in Des Moines, Iowa, and will continue operations from Baltimore, Maryland, and Lincoln, Nebraska. Messrs. Chu and Foley will serve as Executive Chairmen of the Board, which will be composed of a majority of independent directors.

Mr. Foley said, "This is an exciting transaction that we expect will enable us to generate attractive returns for our shareholders by accelerating FGL's growth and profitability through efficient structuring and improved investment management capabilities. I look forward to working closely with Chris and the entire management team to help advance FGL's strategy while continuing to provide industry-leading retirement savings products to policyholders."

Mr. Chu noted, "FGL is a very high-quality business with attractive demographic tailwinds. We look forward to working with management to continue to build a premier insurance platform and accelerate value creation for shareholders. CF Corp. is an ideal platform for FGL given our permanent capital and blue chip long-term investor base. This transaction is transformative and the combination of CF Corp., Blackstone and FNF will add tremendous value to FGL."

Mr. Littlefield added, "This agreement with CF Corp. is a terrific conclusion to our strategic review process. This transaction delivers compelling value to our existing shareholders and ideally positions FGL for our next phase of growth. We believe the expertise and insights that our leading investors will bring as new shareholders of FGL will greatly benefit the company, our policy owners, distribution partners, agents and employees. We see a very bright future for FGL."

Key Transaction Terms and Details

The transaction will be financed with $1.2 billion from CF Corp.'s IPO and forward purchase agreements, and more than $700 million in additional new common and preferred equity. Funds advised by Blackstone Tactical Opportunities, funds advised by GSO Capital Partners LP (the credit division of Blackstone) and FNF have provided a full backstop funding commitment to ensure certainty of funding.

FGL will enter into an investment management agreement with affiliates of Blackstone. This agreement will provide access to Blackstone's superior investment management and strategic oversight capabilities to drive additional value creation for FGL and policyholders, while continuing FGL's current focus on high-quality investment grade assets under the current FGL investment team. Messrs. Chu and Foley will be involved and will lend their expertise to the asset management function led by Blackstone.

In connection with the transaction, CF Corp. and HRG Group, Inc. (NYSE: HRG) ("HRG"), a diversified holding company and FGL's largest shareholder, have approved a purchase agreement under which CF Corp. will acquire certain reinsurance companies from HRG.

Timeframe to Completion

The transaction is expected to close in the fourth quarter of 2017, subject to the approval of the shareholders of CF Corp. and FGL, and receipt of required regulatory approvals and other customary closing conditions. Certain investors that own approximately 18% of CF Corp.'s common shares have entered into voting agreements to support the transaction. In addition, following the execution of the merger agreement, HRG, in its capacity as the majority shareholder of FGL, delivered to CF Corp. a written consent approving and adopting the merger agreement.

Advisors

Bank of America Merrill Lynch and FT Partners are acting as financial advisors to CF Corp., Citigroup is acting as a capital markets advisor and Winston & Strawn LLP, Hogan Lovells US LLP and Debevoise & Plimpton LLP are acting as legal advisors.

Lazard is acting as financial advisor to Blackstone and Debevoise & Plimpton LLP is acting as legal advisor. Sullivan & Cromwell LLP is acting as legal advisor to GSO Capital Partners LP.

Credit Suisse is acting as lead financial advisor to FGL and Jefferies is acting as co-financial advisor to FGL. Rothschild is acting as additional financial advisor to FGL. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to FGL.

Transaction Website

A website with additional information on the transaction can be found here:www.cfcorpandfidelity.com.

About CF Corporation

CF Corporation's primary objective is to build an enduring, high quality business by using permanent capital, a core tenet of the CF Corp. structure. CF Corp. also has the largest individual founder co-investment in a U.S. special purpose acquisition company, which results in alignment of interests with CF Corp.'s investors.

About Fidelity & Guaranty Life

Fidelity & Guaranty Life, an insurance holding company, helps middle-income Americans prepare for retirement. Through its subsidiaries, the company offers fixed annuity and life insurance products distributed by independent agents through an established network of independent marketing organizations. Fidelity & Guaranty Life is headquartered in Des Moines, Iowa and trades on the New York Stock Exchange under the ticker symbol FGL. For more information, please visit www.fglife.com.

About Blackstone

Blackstone is one of the world's leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with over $360 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.

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