Lemonade shifting to takeover Metromile
“They’ve come this way billions of times, and their proprietary data and machine learning algorithms can get us through the most time-consuming and costly parts of the journey,” said Daniel Schreiber, CEO of Lemonade. “In a huge and competitive market like auto insurance, today’s deal is tremendous added value for our customers and shareholders.” (Image: Gabby Jones / Bloomberg)
(Bloomberg) – Lemonade Inc. strengthens its emerging auto insurance business by acquiring pay-per-mile insurer Metromile Inc. in its first acquisition.
The deal values San Francisco-based Metromile, which went public earlier this year through a merger with a blank check company, at around $ 500 million, according to a statement Monday. Metromile shareholders will receive 19-to-1 Lemonade common stock, and the transaction is expected to complete by mid-2022.
The SoftBank Group Corp. Backed Lemonade, which went public last year, debuted an auto insurance product called Lemonade Car last week that is currently being sold in Illinois and plans to roll out the offering in other states. The purchase of Metromile is helping New York-based Lemonade build that business while also providing auto claims data and a team that has been in the business for a decade, according to a Lemonade blog post.
“They’ve come this way billions of times, and their proprietary data and machine learning algorithms can get us through the most time-consuming and costly parts of the journey,” said Daniel Schreiber, CEO of Lemonade. “In a huge and competitive market like auto insurance, today’s deal is tremendous value for our customers and shareholders.”
In a telephone interview, Schreiber said that most of Lemonade’s 1.4 million or so customers are car owners and that bundling new car insurance with other businesses would enable the insurer to attract existing and new customers alike. He called it an “enormous symbiotic” opportunity.
At 11:21 a.m., Metromile shares rose 3.3% in New York, while shares of Lemonade fell 12%. Metromile is down 79% and Lemonade is down 49% this year.
Investors like Chamath Palihapitiyas Social Capital have not done well with Metromile over the past few quarters. Social Capital and other investors have pledged to invest $ 160 million in a private purchase of the stock as part of the Blankoscheck corporate merger. Now, Metromile is being sold for a fraction of its $ 1.3 billion equity value from that earlier merger with the special purpose vehicle.
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