10 January 2018Insurance

Stone Point and founding family bid to take AmTrust private

The family that originally helped found AmTrust Financial Services has partnered with private equity funds managed by Stone Point Capital to propose taking the troubled insurer private in a deal worth around $1.4 billion.

The company’s share price has lost almost two thirds of its value in the last year but its share price gained almost 20 percent in the aftermath of the proposal.

The proposal would see Stone Point Capital funds partner with Barry Zyskind, chairman and CEO of AmTrust Financial Services, and George Karfunkel and Leah Karfunkel (the Karfunkel-Zyskind Family), to acquire all of the outstanding shares of common stock of AmTrust that the Karfunkel-Zyskind Family does not already own.

The Karfunkel-Zyskind Family owns or controls approximately 43 percent of the outstanding shares of AmTrust common stock. The offer is for $12.25 per share in cash, which represents a 20.8 percent premium over AmTrust’s closing stock price on January 8, 2018.

Stone Point and the Karfunkel-Zyskind Family said they believe the proposed transaction will provide AmTrust’s common stockholders with immediate liquidity and certainty of value at a significant premium to the current share price while allowing AmTrust to focus on the long term without the emphasis on short-term results.

Stone Point and the Karfunkel-Zyskind Family expect that a special committee of independent directors of the AmTrust board of directors will consider the proposed transaction and make a recommendation to the AmTrust board of directors, and that the special committee will retain independent legal and financial advisors to assist in its review of the proposed transaction.

Stone Point and the Karfunkel-Zyskind Family said they will not proceed with the proposed transaction unless it is approved by the special committee. In addition, the proposed transaction will be subject to a non-waivable condition requiring approval by holders of a majority of AmTrust common shares not owned or controlled by the Karfunkel-Zyskind Family, senior management or their respective affiliates.

The Karfunkel-Zyskind Family have also informed AmTrust that they are interested only in acquiring the remaining shares of AmTrust common stock that they do not currently own or control, and have no interest in selling any of the shares they own or control, nor would they expect, in their capacity as stockholders, to vote in favour of any alternative sale, merger or similar transaction involving AmTrust. If the special committee does not recommend, or the stockholders of AmTrust do not approve, the proposed transaction, the Karfunkel-Zyskind Family intend to continue as long-term stockholders of AmTrust.

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More on this story

7 November 2017   AmTrust Financial Services has posted a prior year adverse reserve development of $326.9 million on a pre-tax basis for the third quarter ended September 30, 2017.
18 January 2018   AmTrust at Lloyd’s has appointed Chris Gibbs as its new head of space, joining from Osprey Aerospace.
1 March 2018   Stone Point Capital, the Karfunkel Family, and the CEO of AmTrust Financial Services are acquiring the insurer in a transaction valued at approximately $2.7 billion.