How fast time flies. Just a few weeks ago, after being acquired by British group Admiral, French insurtech Luko advertised on billboards in the Paris metro and felt confident enough to joke that it had once won the ‘Next Unicorn’ award. Fast forward to this week and its parent company, Demain ES, will be up for sale via legal notice in newspaper after the Admiral abandoned ship.
What happened in between is a bumpy ride from one offer to another until a court put the brakes on a roller coaster ride that can’t end soon enough for the 120+ employees whose jobs are on the line . They already know they are working for a non-unicorn, but now they are very keen to know if their next employer will be Allianz.
As for policyholders, Luko insists they needn’t worry, as “Luko Cover, the broker and administrator of policies marketed by Luko, and Luko Insurance AG, the insurance company of the Luko Group [are] separate entities […]. Therefore, Luko’s insurance and brokerage operations continue to operate as normal,” the company said.
However, it won’t be business as usual for Demain following the court ruling that came to light this week. The startup’s parent company had entered accelerated safeguarding procedures in June. but as a consequence of its insolvency it will now be under judicial reorganization, a bad omen since this process often ends in liquidation.
Of course, Luko can still be acquired. hence the forthcoming newspaper announcement. However, despite the deal the two companies signed in June this year, it will not be done by Admiral: It has now been confirmed that the British insurance group backed out of the deal on 20 October.
Admiral was to pay €14 million for Luko Cover — €11 million outright, plus an additional €3 million tied to specific milestones. This partly explains why the M&A process was uneven: Luko raised 72 million euros during his solo journey, and it is easy to see how the debtors might have been difficult to accommodate. However, we understand that the main twist was the withdrawal of the Admiral.
There may not be a single reason why Admiral threw in the towel, and the macro context may have played a role. However, according to court proceedings, Admiral rather blamed a €2.3 million dispute that arose during due diligence on how to account for premiums collected by Luko Cover on behalf of insurers, while the prospect of redress VAT also caused concern. TechCrunch reached out to Admiral and its French subsidiary, L’Olivier, for confirmation, but did not hear back.
Regardless, Luko was surprisingly quick to find an alternative, court documents revealed. On November 8, it received a formal offer from Allianz for the same assets that Admiral was to acquire — but with no HR commitments.
While Allianz’s bid did not come with a guarantee of saving jobs at Demain and its subsidiaries, it seemed to make strategic sense. Indeed, the incumbent insurance carrier is getting ready launch a DTC insurtech platform in France called Allianz Direct. Meanwhile, even Luko’s critics acknowledged that the company became the flagship of DTC home insurance in France before expanding further.
As for how much Allianz offered, it depends on who you ask. Demain presented the offer as a total value of 14 million euros. The court disputed this and concluded that it was worth €8m, as the balance would cover the debt buyout. But of course, that’s yesterday’s price, not tomorrow’s.
Allianz’s offer for Demain may still stand even for the company under judicial reorganization, but it would be surprising if its price remained unchanged. On the other hand, its perimeter can also change. Demain is less constrained in his dealings now than when he had to look for a match for the Admiral’s offering.
However, there are parts of Luko that are no longer sold.
Earlier this year, German insurer Getsafe had already taken over the portfolio of German clients largely a legacy of Luko’s acquisition of multi-product insurer Coya in 2022.
Furthermore, while Louko entered the unpaid rent insurance business with the acquisition of Unkle same year, this portfolio is now which was acquired by French stockbroker Solly Azar in collaboration with Sada Assurances. Both buyers have confirmed that these deals are closed and independent of Demain’s legal proceedings.
However, Luko might be able to sell more than what Admiral was interested in buying. But we’re more curious to know who will buy Demain. will it be Allianz, who even offered Demain a daily advance of €25,000 to keep the company afloat? Or could it be another of the potential buyers whose names have been floated at some point, such as AXA, Ornikar or Leocare?
The worst case scenario would be for all offers to disappear. If that were the case, some might wish the court had been more flexible in light of Allianz’s offer. Her latest decision was already somewhat of a surprise to Luko, a source close to the matter told TechCrunch. But from a legal point of view, it seemed inevitable. in French lawsafeguard procedures do not apply to companies that are insolvent, as Demain is now.
Even if the court had some leeway, it probably wouldn’t want to set a precedent, especially at a time when bankruptcy-related proceedings are becoming more common. Earlier this month, French mobility startup Cityscoot announced itself insolvent and then placed under judicial reorganization. Maybe he’ll come out on top, and Luko might too. but knowing the odds, not all companies will, even if they were once future unicorns.
