Old Republic and PMA Capital Announce $365 Million Merger Agreement
10 6월 2010 - 7:00PM
Business Wire
Old Republic International Corporation (NYSE:ORI) (“Old
Republic”) and PMA Capital Corporation (NASDAQ:PMACA)
(“PMA”) announced today that the companies have entered into a
merger agreement pursuant to which Old Republic will acquire all of
PMA’s outstanding common stock. Under the terms of the agreement
approved by the boards of directors of both companies, Old Republic
will issue 0.55 shares of Old Republic common stock in exchange for
each outstanding common share of PMA. Depending on the price of Old
Republic’s common stock preceding the closing of the merger, the
exchange ratio may be adjusted upwards or downwards, but will not
exceed 0.60 or be less than 0.50. The initial exchange ratio
represents a premium of approximately 15% to the closing price of
PMA’s common stock on June 8, 2010, the last trading day before the
signing of the merger agreement. As of the latter date the
transaction therefore attributes a total enterprise value for PMA
of approximately $365 million, consisting of $228 million for PMA
common shares and $137 million for its debt.
The transaction is expected to close during the third quarter of
2010, subject to approval by PMA’s shareholders, regulatory
approvals and other customary closing conditions.
Speaking from PMA’s headquarters, Vincent Donnelly, President
and CEO, said that “We are pleased that we were able to reach this
agreement with Old Republic, and we believe that this merger will
have positive benefits to our shareholders, clients and employees.
We expect that this transaction will enable our shareholders to
realize greater long-term value than if we continued to operate as
a stand-alone entity. We also believe that the additional financial
strength and stability of a larger well diversified company will
benefit our clients, employees and other stakeholders. Following
the closing, we will continue to do business as the PMA Companies,
and we will maintain our company headquarters in Blue Bell,
Pennsylvania with our experienced leadership team and local service
locations. We are excited about the opportunity that Old Republic
presents for the continued profitable growth of our
businesses.”
In announcing the merger from Old Republic’s Chicago
headquarters, Al Zucaro, Chairman and CEO stated that “ . . . we
are extremely pleased to welcome PMA’s management and all of its
associates to our family of companies. This merger is consistent
with our long term strategic plan to grow our General Insurance
business. The alliance of our two companies results in a
well-capitalized insurance group appropriately positioned to take
advantage of the many opportunities and synergies which will no
doubt be available to us. The two companies share a commitment to
conservative underwriting and a focus on select industries
important to the American economy. We are convinced that the
long-term orientation of the decision to effect this merger will at
once provide greater scale, balance and diversification for our
general insurance business, and produce enhanced future benefits
for the combined shareholder groups.”
BofA Merrill Lynch is acting as exclusive financial advisor and
Ballard Spahr LLP as legal counsel to PMA Capital Corporation.
Macquarie Capital acted as financial advisor to Old Republic.
Background
PMA Capital Corporation, headquartered in Blue Bell,
Pennsylvania, is a holding company whose operating subsidiaries
provide insurance and fee-based services. Insurance products
include workers’ compensation and other commercial property and
casualty lines of insurance. Fee-based services include third party
administrator, managing general agent and program administrator
services. The operating subsidiaries are marketed under PMA
Companies and include The PMA Insurance Group, PMA Management
Corp., PMA Management Corp. of New England and Midlands Management
Corporation. As of March 31, 2010, PMA had assets of approximately
$2.4 billion and common shareholders’ equity of $418 million or
$12.96 per share. The current stock market valuation is
approximately $199 million or $6.17 per share. For additional
information visit www.PMACompanies.com.
Chicago-based Old Republic International Corporation is an
insurance holding company whose subsidiaries market, underwrite and
provide risk management services for a wide variety of coverages,
principally in the property and liability, mortgage guaranty, and
title insurance fields. One of the nation’s 50 largest publicly
held insurance organizations, Old Republic has assets of
approximately $14.3 billion and common shareholders’ equity of
nearly $4.0 billion or $16.90 per share. Its current stock market
valuation is approximately $3.1 billion or $12.86 per share. For
the latest news releases and other corporate documents on Old
Republic International visit www.oldrepublic.com.
Forward-looking Statements
This press release includes certain forward-looking statements.
The forward-looking statements are subject to known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Old Republic or PMA to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. These factors include, among others, the timing and
completion of the merger, the ability to obtain regulatory and
other approvals relating to the merger, and the effect of this
announcement on PMA’s customer relationships, operating results and
business generally. These factors also include, but are not limited
to, the risks and uncertainties described in Old Republic’s and
PMA’s reports filed with the Securities and Exchange Commission
(“SEC”). These filings include the Annual Reports on Form 10-K
for the year ended December 31, 2009, which are available at
www.sec.gov., Old Republic and PMA disclaim any intention or
obligation to update or revise any forward-looking statements,
except as required by law.
Additional Information
This press release does not constitute an offer for the sale or
exchange of securities. Old Republic will file with the SEC a
registration statement on Form S-4 that will include PMA’s proxy
statement and will also constitute a prospectus of Old Republic.
Old Republic and PMA also plan to file other documents with the SEC
regarding the proposed transaction. A definitive proxy
statement/prospectus will be sent to PMA’s shareholders. PMA
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER,
OLD REPUBLIC AND PMA.
Shareholders may obtain free copies of the proxy statement and
other documents filed by PMA (when available), at the SEC’s Web
site at www.sec.gov or at PMA’s Web site at www.pmacapital.com. The
proxy statement and such other documents may also be obtained for
free, when they become available from PMA, by directing such
request to Investor Relations, PMA Capital Corporation, 380 Sentry
Parkway, Blue Bell, Pennsylvania, telephone: 610-397-5298.
PMA and its directors, executive officers and other members of
its management and employees may be deemed to be participants in
the solicitation of proxies from PMA Capital’s shareholders in
connection with the proposed transaction. Information concerning
the interests of those persons is set forth in PMA’s proxy
statement relating to the 2010 annual meeting of shareholders and
annual report on Form 10-K for the fiscal year ended
December 31, 2009, both filed with the SEC, and will also be
set forth in the proxy statement relating to the transaction when
it becomes available.
Pma Capital Corp. (MM) (NASDAQ:PMACA)
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