Investors cheer score of North Pointe, QBE deal; A. Schulman proxy fight gets nasty

By Evan Weinberger

New York, Jan. 4 - QBE Holdings, Inc. is hoping for at least a spare in its acquisition of North Pointe Holdings Corp. The New York-based insurer, a subsidiary of Australian insurer QBE Insurance Group Ltd., acquired the Southfield, Mich.-based insurer Thursday evening for around $146 million.

North Pointe is the largest insurer of bowling alleys in the United States and the biggest liquor liability insurer in Michigan.

The deal values North Pointe shares at $16 each, a 50% premium on North Pointe's closing share price of $10.65 Wednesday.

"We are very pleased with the terms of this transaction, which deliver shareholder value in the form of an immediate cash premium, as well as finding an excellent business partner in QBE," said North Pointe president and chief executive officer James Petcoff in a statement released by the company. "QBE Insurance Group is a worldwide insurer that continues to actively build out its U.S. specialty insurance platform. By teaming up with QBE, North Pointe has better future growth opportunities, and increased access to capital."

The deal is set to close in the first six months of the year.

Investors appear to like the score, as North Pointe stock (Nasdaq: NPTE) surged $4.86, or 45.93%, on the deal for a $15.44 close.

The rise in North Pointe stock was small potatoes compared to the rest of the financial markets. Weak job growth numbers and a rise in the unemployment rate stoked recession fears. Stock markets reacted accordingly.

The Dow Jones Industrial Average dumped 256.54 points, or 1.96%, to close at 12,800.18.

That was nothing compared to the 98.03 point, or 3.77%, drop in the Nasdaq, which closed at 2,504.65.

The Standard & Poor's 500 tumbled 35.53 points, or 2.46%, for a 1,411.63 close.

Ramius responds to A. Schulman

Joseph M. Gingo, A. Schulman Inc.'s new CEO, unveiled his 100-day, six-stage plan to improve the Akron, Ohio-based plastic resin and compounds manufacturer.

During the announcement, Gingo said that Ramius Capital Group, LLC was unresponsive to the company's offer to settle a proxy fight by placing one of Ramius' choices onto the board of directors. Gingo said Ramius declined the offer.

On Friday, the hedge fund said a whole lot more.

In a letter released Friday through a subsidiary, Ramius trashed Gingo and his 100-day plan and urged shareholders to vote for its slate of board members at their meeting Jan. 10.

"In our view, Mr. Gingo's '100 Day Plan' has absolutely no substance and creates nothing more than the illusion of change," Ramius partner Mark Mitchell said in the statement. "Clearly it is a desperate, last minute attempt to sway stockholder votes just before the annual meeting."

Gingo's plan called for the following:

• More efficient and effective use of A. Schulman's North American manufacturing facilities;

• A focus on value-added products to drive growth in the polybatch and engineered compounds segments;

• Reassessment of A. Schulman's North American automotive business to emphasize profitable areas;

• Suspension of further capital expenditures on the company's Invision PVC-free polyolefin compounds until the marketing strategy has been refined;

• Identification of additional efficiencies in the sales and administrative structure of European operations; and

• Ensuring that the best leadership team is in place to execute the company's strategy.

Mitchell said that the plan proved that Ramius lacked direction.

A. Schulman wants to keep board members James Karman and Gingo in their positions. Ramius wants to replace them with Michael Caporale Jr. and Lee Meyer.

Caporale recently was the president, chairman and director of Associated Materials Inc., a producer of exterior building products. Meyer's last position was president and CEO of Ply Gem.

Mitchell was critical of Gingo's hiring, saying that he was an "insider" at A. Schulman and is unable to make the changes needed.

"Ramius' independent nominees have successful and proven track records with significant CEO, board, and relevant industry experience," Mitchell said in the letter. "Stockholders deserve a board comprised of knowledgeable, experienced and truly independent directors who are committed to exploring all available strategic alternatives and ensuring that the company is run for the best interest of all stockholders."

Ramius is the beneficial holder of 7.4% of A. Schulman stock.

While all this was going on, A. Schulman stock (Nasdaq: SHLM) picked up 80 cents, or 3.79%, on the day to close at $21.89.

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