Reliance Global Group Announces Enhanced Terms for Pending Spetner Acquisition

Rhea-AI Summary

Reliance Global Group (Nasdaq: RELI) has announced enhanced terms for its pending acquisition of Spetner Associates. The upfront cash payment required to close the transaction has been reduced by over $2 million, from $8 million to $5.5 million. This revision is expected to provide greater flexibility in funding and minimize shareholder dilution. The acquisition remains on track to close in the second half of 2024.

Since the initial announcement, Spetner's BenManage voluntary benefit insurance segment has grown significantly, now covering over 85,000 employees, up from 45,000. The acquisition is anticipated to nearly double Reliance's annual revenue to approximately $28 million and boost Adjusted EBITDA. Reliance views this as a transformative acquisition aligning with its 'OneFirm' strategy, aiming to accelerate growth and enhance shareholder value.

Positive

• Reduction of upfront cash payment by $2.5 million for the Spetner acquisition
• Spetner's BenManage segment growth from 45,000 to over 85,000 covered employees
• Expected doubling of annual revenue to approximately $28 million post-acquisition
• Anticipated boost in Adjusted EBITDA following the acquisition

Negative

• None.

Insights

Financial Analyst

The revised terms for Reliance Global Group's acquisition of Spetner Associates are financially positive. The $2.5 million reduction in upfront cash required is significant, improving the company's financial flexibility. This adjustment could lead to reduced debt or less dilutive equity financing. The seller's acceptance of more deferred payment suggests confidence in the deal's long-term value. Spetner's growth from 45,000 to 85,000 covered employees is impressive, potentially translating to higher revenues and profits post-acquisition. The projected doubling of annual revenue to $28 million and boost in Adjusted EBITDA are substantial. However, investors should note that the deal's closing is still months away and integration risks remain.

Insurance Industry Expert

This acquisition aligns well with Reliance Global's 'OneFirm' strategy, potentially creating synergies in the insurance sector. Spetner's BenManage voluntary benefit insurance segment has shown remarkable growth, nearly doubling its covered employee base. This rapid expansion in the voluntary benefits space is noteworthy, as it's a high-growth area within the insurance industry. The combined entity could leverage Reliance's technology focus to further scale Spetner's operations. However, the delayed closing until the second half of 2024 introduces market and regulatory risks. Investors should monitor how Reliance plans to integrate Spetner's operations and capitalize on cross-selling opportunities to fully realize the projected financial benefits.

Market Research Analyst

The revised acquisition terms and Spetner's growth paint a positive picture for Reliance Global Group. The voluntary benefits market is experiencing strong growth, driven by employers seeking to enhance their benefit packages amidst a competitive labor market. Spetner's 89% increase in covered employees outpaces the industry average, indicating strong market positioning or effective sales strategies. Post-acquisition, Reliance could potentially leverage this growth to expand its market share. However, investors should be cautious about execution risks, especially given the extended timeline to closing. The market's reaction to this news will likely be positive, but tempered by the wait until 2024 for deal completion. It's important to monitor how Reliance maintains momentum and manages investor expectations during this interim period.

Cash required to close reduced by over $2 million

Acquisition remains on track - anticipated to close in the second half of 2024

LAKEWOOD, N.J., Sept. 09, 2024 (GLOBE NEWSWIRE) -- Reliance Global Group, Inc. (Nasdaq: RELI; RELIW) (“Reliance”, “we” or the “Company”) today provided an update on the pending acquisition of Spetner Associates, including a significant reduction in the upfront cash payment required to close the transaction. The Company also reaffirmed that the transaction remains on track and is anticipated to close, as announced, in the second half of 2024.

Ezra Beyman, Chairman and CEO of Reliance Global Group, stated, "We are pleased to announce that we have revised the terms of the pending acquisition of Spetner Associates, reducing our upfront cash consideration to $5.5 million, from $8 million as originally contemplated. As such, we believe the new terms are substantially improved for our shareholders, and provide us greater flexibility in how we fund the transaction—in order to minimize dilution and maximize returns. We believe that the sellers’ willingness to accept less cash up front and a larger seller-financed note later reflects their confidence in the value of the combined entity, post-acquisition.”

“As we have previously stated, the transaction is surpassing our initial expectations. Since first announcing our plans, Spetner’s BenManage voluntary benefit insurance segment has experienced impressive growth, now covering over 85,000 employees, a significant increase from their 45,000 covered employees when the transaction was first announced. We could not be more excited about the continued growth in the underlying business as the acquisition is expected to nearly double our annual revenue to approximately $28 million, and meaningfully boost our Adjusted EBITDA.”

“We remain focused on our long-term goal of building a highly profitable business that generates strong returns for our shareholders. We believe this transformative acquisition will unlock significant opportunities aligned with our 'OneFirm' strategy. We remain committed to making Reliance a leading technology-driven company focused on sustainable profitability and enhanced shareholder value, and we expect the acquisition of Spetner Associates to greatly accelerate our growth trajectory."

About Reliance Global Group, Inc.

Reliance Global Group, Inc. (NASDAQ: RELI; RELIW) is an InsurTech pioneer, leveraging artificial intelligence (AI), and cloud-based technologies, to transform and improve efficiencies in the insurance agency/brokerage industry. The Company’s business-to-business InsurTech platform, RELI Exchange, provides independent insurance agencies an entire suite of business development tools, enabling them to effectively compete with large-scale national insurance agencies, whilst reducing back-office cost and burden. The Company’s business-to-consumer platform, 5minuteinsure.com, utilizes AI and data mining, to provide competitive online insurance quotes within minutes to everyday consumers seeking to purchase auto, home, and life insurance.  In addition, the Company operates its own portfolio of select retail “brick and mortar” insurance agencies which are leaders and pioneers in their respective regions throughout the United States, offering a wide variety of insurance products. Further information about the Company can be found at https://www.relianceglobalgroup.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. In some cases, forward-looking statements can be identified by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions and include statements such as the Company having built a best-in-class InsurTech platform, making RELI Exchange an even more compelling value proposition and further accelerating growth of the platform, rolling out several other services in the near future to RELI Exchange agency partners, building RELI Exchange into the largest agency partner network in the U.S., the Company moving in the right direction and the Company’s highly scalable business model driving significant shareholder value.  Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission and elsewhere and risks as and uncertainties related to: the Company’s ability to generate the revenue anticipated and the ability to build the RELI Exchange into the largest  agency partner network in the U.S., and the other factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as the same may be updated from time to time. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company’s Quarterly Reports on Form 10-Q, the Company’s Current Reports on Form 8-K and other subsequent filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

Contact:

Crescendo Communications, LLC
Tel: +1 (212) 671-1020
Email: RELI@crescendo-ir.com

FAQ

What are the new terms for Reliance Global Group's acquisition of Spetner Associates?

Reliance Global Group has revised the terms of the Spetner Associates acquisition, reducing the upfront cash payment from $8 million to $5.5 million. This $2.5 million reduction aims to provide greater funding flexibility and minimize shareholder dilution.

When is the Reliance Global Group (RELI) acquisition of Spetner Associates expected to close?

The acquisition of Spetner Associates by Reliance Global Group (RELI) is anticipated to close in the second half of 2024, as originally announced.

How has Spetner's BenManage segment grown since the acquisition announcement?

Since the initial acquisition announcement, Spetner's BenManage voluntary benefit insurance segment has grown significantly, increasing its coverage from 45,000 to over 85,000 employees.

What is the expected impact of the Spetner acquisition on Reliance Global Group's (RELI) revenue?

The acquisition of Spetner Associates is expected to nearly double Reliance Global Group's (RELI) annual revenue, bringing it to approximately $28 million. It is also anticipated to meaningfully boost the company's Adjusted EBITDA.