Life Quotes CFO: With Tender Offer, Aim Is to Take Company Private

LQ Acquisition Inc. has started a tender offer for all of the outstanding publicly held shares in Life Quotes Inc. that it doesn't own for $4 a share cash.

The deal would be about $18.6 million, plus expenses, Phil Perillo, chief financial officer of Life Quotes, told BestWire. LQ Acquisition is a new company formed to acquire the outstanding stock of Life Quotes (NASDAQ: QUOT), and the likely intent, if the tender offer is successful, is to take the company private, said Perillo.

LQ Acquisition is owned by Robert S. Bland, president and chief executive officer of Life Quotes, an insurance agency and brokerage that operates an online service for people shopping for life insurance.

LQ Acquisition said it currently owns about 31% of Life Quotes' outstanding shares. In the first quarter, Life Quotes posted a net loss of $789,000, compared with a profit of $192,000 the same period a year ago. Revenues declined 39% to $2.4 million.

Since its start in 1984, Life Quotes said it's developed a proprietary insurance price comparison and order-entry system that offers instant quotes from about 30 life insurance companies.

In 1984, the company started out as Quotesmith Corp., and in 1999, when the company went public, the name was changed to quotesmith.com, Perillo said. The name changed again in 2006 to insure.com. Last October, the name changed yet again to Life Quotes when the company sold the website and the name to Quinstreet for $16 million (BestWire, Oct. 26, 2009). The amount "was a good price," Perillo said.

Years ago, Quotesmith Corp. was in the business of providing a quoting service to insurance agents, allowing them to provide comparative quotes from multiple carriers, Perillo said.

But with the advent of the Internet investment boom, "we saw an opportunity" to sell insurance direct to consumers online and so went public, Perillo said. Having dot-com in the name "was a clear signal to investors that it was an Internet company."

However, the company is "not just an Internet company anymore," he said of the company's current name. It reflects that it can serve its customers over the phone with licensed agents, Perillo said.

The purchase of Life Quotes shares in the tender offer is expected to be funded though a loan from Life Quotes to LQ Acquisition. Unless extended or earlier terminated, the offer will expire at midnight on July 15.

LQ Acquisition also signed share tender agreements with William V. Thoms and Zions Bancorporation that provides that these stockholders will tender their shares in the offer, which LQ Acquisition said should provide it with more than 73% of the outstanding shares.

On the afternoon of June 11, Life Quotes' stock was up 42.86% from the previous close, trading at $3.95 a share.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])