Fort Worth Texas-based Hallmark Financial Services, Inc. today reaffirmed its proposal to acquire all of the outstanding stock of Chicago-based Specialty Underwriters’ Alliance Inc. (SUAI).
Hallmark submitted a proposal to acquire SUAI in a stock-for-stock transaction where each share of SUAI is valued at $6.50 in Hallmark common stock. The offer price of $6.50 in Hallmark stock for each outstanding share of SUAI represents a significant 37 percent premium to SUAI’s trailing 30-day average closing price of $4.74 per share as of Friday, June 13, the last trading day prior to Hallmark’s initial written proposal.
On June 26 SUAI’s publicly-stated response to the Hallmark proposal was no deal: “After due deliberation, the SUAI Board
unanimously concluded not to accept this offer.”
In a written statement SUAI added that, “we wish to remain independent and continue with the execution of its current business strategy, which the Board believes represents a better long-term value for the company’s shareholders. This plan includes a focus on targeted specialty market niches based on the company’s in-depth knowledge of these customer classes and a wholesale distribution model with its exclusive Partner Agents who are aligned with the
company’s interests to maximize profitability.”
SUIA’s targeted customers include tow truck owners, building contractors, professional employee organizations and public entities.
Hallmark letter argues that as SUAI’s largest shareholder, with ownership of 1,429,615 shares representing 9.7 percent of the common stock outstanding, its shareholders would be better served.
Hallmark said that in its June 16 written proposal the company requested a meeting with SUAI’s board of directors and/or management as soon as possible to discuss the proposal. SUAI declined numerous attempts to set up some sort of meeting.
In its letter to SUIA, Hallmark Executive Chairman Mark E. Schwarz said, “We ask that you not summarily dismiss our proposal and deny your shareholders this truly outstanding opportunity. Hallmark is a bonafide buyer, without a financing contingency, and requires no unusual conditions to close.”
Schwarz added that “SUAI shareholders’ upside potential will not be capped. SUAI shareholders will retain a continuing ownership interest in Hallmark and will benefit from any future gains in Hallmark shares.”
Schwarz concluded his letter by saying that “Our proposal is a firm proposal, subject only to confirmatory due diligence, the negotiation of a mutually satisfactory definitive agreement and customary shareholder and regulatory approvals.
Insurance Journal’s request for additional comment from SUIA remained unanswered at the time of this writing.
Source: The Hallmark Financial Services, Inc.
Topics Excess Surplus Underwriting
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