By Lisa Kerner
Charlotte, N.C., Feb. 21 - The boards of directors of Meadowbrook Insurance Group, Inc. and ProCentury Corp. unanimously approved a definitive merger agreement between the two companies.
Meadowbrook will acquire ProCentury in a transaction valued at about $272.6 million, according to a company news release.
ProCentury shareholders will be entitled to receive $20 in cash or Meadowbrook common stock with a value of $20, subject to proration.
The per-share offer price is a 33% premium to the 30-day volume-weighted average sale price of ProCentury common shares.
Meadowbrook plans to use a combination of cash and debt to fund the cash portion of the purchase price.
The transaction is slated for completion in the third quarter of 2008, subject to shareholder approval.
Once the merger is complete, the newly combined company will operate under the Meadowbrook name and will continue to trade on the New York Stock Exchange under the ticker symbol "MIG."
The acquisition will expand Meadowbrook's specialty lines capabilities with ProCentury's expertise in the excess and surplus lines market.
Meadowbrook chief executive officer Robert S. Cubbin will continue in his role, and two ProCentury board members will join Meadowbrook's board.
"The combination of these two companies creates a diversified platform and gives both companies the size and product depth to compete at a level that couldn't be achieved as separate entities," Cubbin said in the release.
ProCentury said it will continue operations in each of its existing offices post-merger with minimal employee disruption.
Freidman, Billings, Ramsey & Co. is the financial adviser to ProCentury. ParaCap Group LLC is advising Meadowbrook.
Meadowbrook is a risk management solutions provider located in Southfield, Mich.
ProCentury is a specialty property and casualty insurance holding company based in Columbus, Ohio.
| Acquirer: | Meadowbrook Insurance Group, Inc.
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| Target: | ProCentury Corp.
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| Announcement date: | Feb. 21
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| Transaction total: | $272.6 million
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| Price per share: | $20 cash or Meadowbrook common stock
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| Expected closing: | Third quarter of 2008
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| Stock price for acquirer: | NYSE: MIG; $9.16 on Feb. 20
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| Stock price of target: | Nasdaq: PROS; $15.38 on Feb. 20
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