Ebix, Goldman Sachs Terminate Merger Agreement Amid Probe

Ebix Inc., a supplier of software and E-commerce services to the insurance industry, announced that it and an affiliate of Goldman, Sachs & Co. have agreed to terminate their previously announced merger agreement.

The merger agreement, announced on May 1, 2013, had provided for Ebix to be acquired by an affiliate of Goldman Sachs for approximately $743 million. Goldman Sachs was not immediately available for comment on Thursday.

The Atlanta-based Ebix said the decision to call off the merger agreement was the result of a letter received by the company on June 14 from the U.S. Attorney for the Northern District of Georgia that it had opened an investigation into allegations of intentional misconduct.

These allegations have been brought to the U.S. Attorney’s attention by the pending shareholder class action lawsuits against the company’s directors and officers as well as by the media and other sources, according to Ebix’s announcement.

The pending shareholder class action lawsuits and an SEC investigation involving the same subject matters were previously disclosed by the company in its periodic reports filed with the SEC.

Ebix said it has been informed by the office of the U.S. Attorney that their investigation is in its preliminary stages and that it is too early to make a determination of whether any violation of the securities laws or other laws has occurred, or whether any individual or entity could be considered a target, subject or witness in the investigation.

The merger agreement is being terminated without payment of a termination fee by either party, and each party and certain significant shareholders of the company and each of their respective affiliates have agreed to release each other from all claims arising under or related to the terminated merger agreement and related transaction agreements.

“We believe the allegations in the class action suits are without merit,” said Robin Raina, chairman and CEO of Ebix.

“We want to thank Goldman Sachs for their interest in acquiring Ebix and we are naturally disappointed that we could not complete a transaction at this time. The company remains focused on running its business and continuing to provide its customers with the high quality products and services on which they rely,” CEO Raina said.

“The company’s balance sheet remains strong and we believe the company is well positioned for future growth and success.”

Pavan Bhalla, chairman of the special committee of the Ebix’s board of directors, added, “We are committed to fully cooperate with all the regulatory authorities, as they conduct their investigations and believe that the allegations in the class action lawsuits, which we have understood to form the basis of these investigations, are without any merit.”

“We look forward to what we expect will be a favorable resolution of these matters. We are committed to the highest standards of integrity in our business and have confidence in the ability of the Ebix management team to lead the company forward,” Bhalla said.

Ebix’s board of directors also announced that it intends to continue to evaluate strategic options for the company.

An international supplier of on-demand software and E-commerce services to the insurance industry, Ebix provides products ranging from infrastructure exchanges, carrier systems, agency systems and BPO services to custom software development.