AmTrust shareholders decide on privatisation plan
AmTrust Financial Services’ shareholders are voting today, June 21, 2018, at 10:00 am (EDT) in a special meeting on the privatisation plan of the specialty insurer.
Under the terms of an amended agreement, the Karfunkel-Zyskind Family and private equity funds managed by Stone Point Capital will acquire the approximately 45 percent of the company's shares for $14.75 per share in cash via Evergreen Parent. This represents an increase of $1.25 per share, or 9.3 percent, in cash consideration to AmTrust public stockholders, over the previously agreed upon $13.50 per share, and a 45 percent premium to the company's unaffected closing stock price on January 9, 2018.
The transaction values the fully diluted equity of the insurer which specializes in the coverage for small businesses at approximately $2.95 billion, excluding the company's outstanding preferred stock. AmTrust stockholders of record as of April 5, 2018 will be entitled to vote at the special meeting.
AmTrust reported a net loss of $348.9 million for 2017 after a net profit of $430.4 million in 2016. CEO Barry Zyskind had previously argued that as a private enterprise AmTrust will be able to focus on long-term decisions, without the emphasis on short-term results. AmTrust wants to address financial controls as well as pricing and reserve adequacy issues.
AmTrust and Evergreen Parent have entered into a settlement and support agreement earlier in June with affiliates of Carl C. Icahn (the Icahn Group) pursuant to which the Icahn Group has agreed to support the transaction and waive appraisal rights and other claims with respect to the transaction.
Before the offer price increase, Icahn was seeking support among shareholders to vote against the going private transaction at the “rock bottom price of $13.50 per share”.
Central Europe-based investment firm Arca Capital still contends the fair value of AmTrust is approximately double the current $14.75 per share amended offer price and has already sent a written demand for appraisal to management.
Should shareholders vote to approve the buyout at the special meeting, Arca Capital intends to proceed with exercising its appraisal rights through the Delaware Court of Chancery.
Arca Capital, which owns approximately 2.4 percent of outstanding shares of AmTrust Financial, has led an advocacy campaign on behalf of ordinary investors to oppose the privatization of the company and continues to urge investors to vote NO on the amended $14.75 offer.
"Neither the $13.50 per share offer nor the amended $14.75 per share offer represent anywhere near fair value for the firm,” said Pavol Krúpa, chairman of Arca Capital.
“We urge shareholders to vote NO on the privatization transaction in advance of the June 21st Special Meeting. The Zyskind/Karfunkel family knows well that the long-term price target of AmTrust is between $25 and $31 per share thus they will continue to increase their offers, as they have done twice before, if shareholders reject this lowball offer. Arca Capital will accept nothing less than fair value for its shares and urges other shareholders not to do so either," Krúpa added.
AmTrust expects that the transaction will close in the second half of 2018.
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