American billionaire Michael Dell's $7.7 billion insurance buyout seeks $2.3 billion in loans

Morgan Stanley has started selling $2.3 billion of loans to help pay for the $7.7 billion takeover of Baldwin Insurance Group Inc. by American billionaire Michael Dell's family office and its partner Sequence Holdings.

The bank launched the financing on Nov. 3. It is made up of a $2 billion seven-year term loan and a $300 million seven-year delayed-draw term loan, which can be drawn later. The package also includes $750 million of second-lien secured debt that is being placed privately. Early price talk on the loans is about 3.5 percentage points over the floating benchmark rate, and the term loan is being offered at 99 cents on the dollar.

DFO Management, the firm that manages Dell's money, and Sequence agreed on Sept. 14 to buy the Tampa, Florida-based insurance broker for $32.50 a share in cash. That price was about 88% above Baldwin's closing price on June 17, the day before reports of a possible takeover first surfaced. The deal values Baldwin's equity at about $4.6 billion and includes about $3.1 billion of net debt that will be taken on or refinanced. The total is about 20 times Baldwin's adjusted earnings before interest, taxes, depreciation and amortization of about $396 million over the previous 12 months.

How the deal is structured

The buyers will form a new company that will own a majority of Baldwin. Some Baldwin employees who hold shares will roll part of their holdings into the new company and keep a minority stake. Chief Executive Officer Trevor Baldwin and his father, Lowry Baldwin, have signed agreements to vote for the deal and to keep part of their interest in the business.

The merger is not conditional on financing. Morgan Stanley advised DFO and Sequence on the deal. Baldwin's board approved it unanimously on the recommendation of a special committee of independent directors. The deal still needs approval from shareholders and regulators, and the companies expect it to close in the first quarter of 2027. Baldwin's shares will be removed from the Nasdaq when it does.

Sequence is led by Chief Executive Officer Michael J. Lee, who said the group plans to "rebuild workflows, products, and services around what is now possible with technology." Dell said DFO "invests with the flexibility and patience of permanent capital."

Trevor Baldwin said the company's strategy would not change. "Our vision and strategy are not changing," he said when the deal was announced, adding that what would change was "the pace of our investments in talent and technology."

Baldwin's growth

Lowry and Trevor Baldwin co-founded the business in 2011 and took it public on the Nasdaq in October 2019 as BRP Group Inc. It changed its name to The Baldwin Group in 2024. The company sells insurance and risk-management services to businesses and individuals across the U.S. and employs about 5,000 people. Most of its revenue comes from recurring commissions and fees.

Dell, 61, started the computer business that became Dell Technologies from his dorm room at the University of Texas in 1984. He owns about 40% of Dell Technologies Inc., whose shares have surged this year on demand for servers used in artificial intelligence. Forbes values his fortune at about $229 billion.