Goldman Sachs has called off its deal to buy Ebix because the insurance technology provider is facing an investigation into alleged misconduct at its business.
The disclosure sent shares of Atlanta-based Ebix down $8.72, or 44 percent, in trading Thursday, closing at $11.00. Ebix has denied the allegations of misconduct.
Goldman Sachs & Co. and Ebix Inc. announced the deal last month. Ebix stockholders were to receive $20 per share, or about $744 million based on its 37.2 million shares outstanding. They said the deal was worth $820 million including debt.
The companies announced Thursday that they had agreed to terminate the deal.
Ebix, based in Atlanta, was listed as one of the 100 fastest-growing companies by Fortune magazine for four consecutive years, beginning in 2009. In 2012, it was 87th on the list; its three-year average revenue growth was 32 percent, according to the magazine.
It was as high as 3rd in 2010, though in 2011, when it was listed 19th, Fortune noted that Ebix had denied charges that it was padding its earnings.
Ebix made $200 million in 2012, an 18 percent increase over 2011 revenues, and had $71 million in profits, a 1.1 percent decrease from 2011.
In the first quarter of 2013, revenues were up 20.1 percent, to $52.6 million, and profits were up 10.6 percent, to $17.3 million.
Ebix said that it received a letter on Friday from the U.S. Attorney General for the Northern District of Georgia that it opened an investigation into allegation of intentional misconduct brought to its attention by pending shareholder class-action lawsuits. Ebix said the lawsuits and an investigation by the Securities and Exchange Commission on the same issue were previously disclosed in its regulatory filings.
Ebix Chairman and CEO Robin Raina said in a statement that Ebix feels the lawsuits’ allegations are without merit.
Pavan Bhalla, chairman of the special committee of the board, said that Ebix plans to fully cooperate with authorities.
The board said it plans to continue evaluating strategic options for the company.
There will be no termination fee paid by either Ebix or Goldman.
