How quickly time passes! Just a few weeks ago, shortly after its acquisition by British group Admiral was announced, French insurance tech company Luko advertised itself on billboards in the Paris metro, joking about the fact that it had previously won the “Next Unicorn” award. I was confident enough to say so. Fast forward to this week, and its parent company, his Demain ES, is being put up for sale. Legal notice in newspaper After the Admiral abandons ship.
What happened during this time was a wild ride from offer to offer until the courts put the brakes on a roller coaster that won’t end soon for the more than 120 employees whose jobs are on the line. It was a great journey. They already know they work for a non-unicorn company, but they’re probably keen to know if their next employer will be Allianz.
As for policyholders, Luko insists there is no need to worry. “Luco Cover, the broker and manager of the contracts sold by Luco, and Luco Insurance AG, the insurance company of the Luco Group.” [are] separate entity […]. Therefore, Ruco’s insurance and brokerage operations will continue to operate as usual,” the company said.
But it will not be business as usual for Mr. DeMaine following the court’s decision revealed this week. The startup’s parent company entered into accelerated safeguard proceedings in June. However, as a result of bankruptcy, they are now subject to judicial restructuring, which is a bad omen, since this process often ends in liquidation.
Of course, Luko is still available. Therefore, the following notice will be published in the newspaper. But despite the agreement the two companies signed in June this year, it is not Admiral’s fault: it has now been confirmed that the British insurance group withdrew from the agreement on October 20th.
Admiral will pay 14 million euros for Luko Cover, with the full amount of 11 million euros plus an additional 3 million euros related to certain milestones. This partly explains why the M&A process has been bumpy: Luko says: 72 million euros It is easy to imagine how difficult it was for the debtor to respond as the debtor was in the middle of a standalone transaction. But as we understand it, the biggest development was the admiral’s withdrawal.
There may not be just one reason why Admiral threw in the towel, and the macro context may be at play. However, according to court proceedings, Mr Admiral instead blamed a €2.3 million disagreement that arose during due diligence regarding the accounting treatment of insurance premiums collected by Ruco Cover on behalf of the insurance company, while offering VAT relief. The prospect also raised eyebrows. TechCrunch reached out to Admiral and its French subsidiary L’Olivier for confirmation, but did not hear back.
Despite this, Luco was surprisingly quick to find an alternative, court documents reveal. On November 8, the company received a formal offer from Allianz for the same assets that Admiral planned to acquire, but no commitments were made on the human resources side.
Although Allianz’s proposal did not guarantee job security for Demain and its subsidiaries, it seemed to make sense on a strategic level. In fact, incumbent insurance companies are preparing for: launchA French DTC insurtech platform called Allianz Direct. Meanwhile, Luco’s critics acknowledged that the company became the poster child for direct-to-consumer home insurance in France before expanding further.
How much Allianz offered depends on who you ask. Demain made an offer worth a total of 14 million euros. The tribunal disagreed and concluded that it was worth €8 million, with the remainder going towards assuming the debt. But of course, that’s yesterday’s price, not tomorrow’s price.
Allianz’s offer for Demain may still be valid even with the company under judicial restructuring, but it would be surprising if the price remained the same. On the other hand, its surroundings may also change. Demain is now less constrained in his dealings than he was when he had to find someone to accept the Admiral’s proposal.
However, Luko has parts that are not currently available for sale.
Earlier this year, German insurer GetSafe had already acquired a German customer portfolio from Luco’s acquisition of multi-product insurer Koya in 2022.
In addition, Ruco has entered the non-payment rent insurance business. Obtaining Uncle In the same year, the portfolio is now Acquired by French broker Solly Hazard Partnered with Sada Sompo Insurance. Both acquirers confirmed that these transactions are complete and independent of Mr. DeMaine’s judicial proceedings.
Still, Luko may be able to sell more than the Admiral wanted to buy. But what we want to know more about is who will buy Demain. Was it Allianz, which offered Demain an advance payment of 25,000 euros a day to keep the company afloat? Or could it be another possible buyer whose names have been floated at some point, such as AXA, Ornikar or Leocare?
The worst case scenario is that all offers disappear. If that were to happen, some may wish the court had been more flexible in considering Allianz’s offer. A person close to the matter told TechCrunch that the latest decision was already a bit of a surprise to Ruco. But from a legal perspective, it seemed inevitable. French law Safeguard procedures do not apply to insolvent companies, as they currently do in Demain.
Even if courts had some leeway, they would probably be reluctant to set a precedent, especially now that bankruptcy-related proceedings are becoming more common. Earlier this month, French mobility startup Cityscoot declared went bankrupt and placed after Under judicial rehabilitation. Maybe that’ll make it to the top, and maybe Ruco will as well. However, despite the possibility, not every company that once was a future unicorn will be.
Source: techcrunch.com
