According to a news release, Allstate will be paying $4 billion for the insurance company. ALL will use cash to complete the deal. It’s doing so with $2.2 billion in cash and resources, as well as issuing $1.5 billion of new senior debt.
The deal will have holders of NGHC stock receiving $34.50 per share. That includes a cash payment of $32.00 per share from Allstate and a closing dividend payment of $2.50 per share from National General. The offer is a 69% premium over the NGHC stock’s closing price on Tuesday.
Tom Wilson, chairman, president and CEO of Allstate, has this to say about the insurance news.
“The acquisition increases personal lines premiums by $4.0 billion and market share by over 1 percentage point to 10%. National General’s business and technology platforms will be utilized to further strengthen Allstate’s existing independent agent businesses. The transaction will be accretive to adjusted net income earnings per share and return on equity beginning in the first year.”
The deal already has the approval of National General’s Board of Directors. It will also need approval from a majority of shareholders as well. It’s reached an agreement with 40% of shareholders for the acquisition. MSD Capital, which has a 7.4% stake in the company, is also supporting the acquisition.
So long as regulators don’t pose a problem, National General and Allstate expect the deal to close in early 2021.
NGHC stock was up 64.6% and ALL stock was down 4.9% as of Wednesday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.