Berkshire Partners LLC
has merged its N.E.W. Customer
Service Cos., an administrator
of product warranties, with Asurion
Corp., a cell-phone warranty
company owned by a trio of private
equity firms, several sources said
Thursday, May 22.
The transaction occurred in the
past month, one person said. "This
was very much under the radar screen,"
the source said.
It was not clear who would end
up with control, but because Asurion
is larger, it seems likely that
its owners will hold a majority
stake. N.E.W. and Asurion are keeping
their debt structures in place,
sources said.
"They're complementary businesses,"
one banker said. "It's a play to
get scale. N.E.W. probably wouldn't
fetch the price today that it will
in a couple of years."
Gerald Risk, Asurion's CFO, declined
comment. Officials for N.E.W. could
not be reached for comment.
Berkshire, a Boston private equity
firm, bought N.E.W. Customer in
2006 for $1.2 billion from TH
Lee Putnam Ventures and Freeman
Spogli & Co. Berkshire injected
about $350 million in equity. Dulles,
Va.-based N.E.W manages the contracts
and warranties for major retailers
of consumer electronics, computers,
appliances, sporting goods and other
products. It employs nearly 3,000.
Freeman Spogli is believed to still
own a stake in N.E.W.
Asurion, of Nashville, provides
roadside assistance and handset
insurance for wireless carriers.
It employs 5,000.
In an unannounced deal in July
2007, Madison Dearborn Partners
LLC, Providence Equity Partners
LLC and Welsh, Carson, Anderson
& Stowe acquired Asurion from
TA Associates Inc. and
DST Systems Inc.
TA Associates, which had invested
$59 million in 2001, sold all of
its stake. DST had owned 37.4% and
sold about 30% for a pretax gain
of about $600 million, according
to regulatory filings.
No price has been disclosed for
last year's buyout of Asurion, but
Merrill Lynch & Co., Deutsche
Bank AG, Bank of America
Corp. and Lehman Brothers
Inc. provided a $2.43 billion
loan for the deal, according to
Loan Pricing Corp., suggesting
that the company was valued at $3.5
billion or more.
Calls to Berkshire Partners,
Madison Dearborn, Providence Equity,
Welsh Carson and Freeman Spogli
were not returned.
