Fremont Michigan InsuraCorp Inc., a Michigan-exclusive property and casualty insurer, has agreed to be acquired by Auto Club Insurance Association (ACIA), a Michigan-domiciled reciprocal inter-insurance exchange.
Under the terms of the announced merger agreement, ACIA will acquire all of the outstanding shares of Fremont for $36.15 per share in cash, for an aggregate purchase price of approximately $67.7 million.
The $36.15 per share purchase price represents a premium of approximately 35 percent over the $26.75 per share closing price of FMMH on April 15, 2011, the last trading day prior to the merger announcement. The purchase price equals approximately 1.4 times the GAAP book value of Fremont at Dec. 31, 2010.
The transaction was unanimously approved by Fremont’s board of directors, which is recommending that Fremont’s shareholders vote to approve the merger.
The transaction is subject to customary closing conditions, including the receipt of regulatory approvals, and approval by a majority of Fremont’s shareholders. There is no financing condition and the purchase price will be made with ACIA’s available cash. The transaction is expected to close in the third quarter of 2011.
Fremont announced in January that it would explore a broad range of strategic alternatives to enhance shareholder value after rebuffing a number of takeover bids by Texas-based Biglari Holdings Inc.
Sardar Biglari, Chairman and CEO of Biglari Holdings Inc., holder of approximately 9.7 percent of the stock of Fremont, voiced support for the transaction, saying “I have enjoyed working with Fremont’s Chairman of the Special Committee in our effort to realize the full value of Fremont’s shares. The merger with ACIA represents a victory for all Fremont stockholders. We applaud the Committee’s efforts.”
Certain other stockholders representing approximately 16 percent of Fremont’s stock, including Mitchell Partners, L.P., holder of approximately 9.9 percent of Fremont’s stock, have signed a shareholders agreement committing to vote their shares in favor of the transaction, subject to the terms of the shareholders agreement.
Given the Special Meeting of Shareholders that will be called in the near future, Fremont’s board has decided to delay the 2011 Annual Meeting of Shareholders usually held in May. Shareholders will be provided a Notice of the Special Meeting along with proxy materials when the date is set.
Fremont Michigan InsuraCorp Inc. is the holding company for Fremont Insurance Company. Headquartered in Fremont, Mich., the company provides property and casualty insurance to individuals, farms and small businesses exclusively in Michigan
Auto Club Insurance Association and its affiliates offer a full range of personal lines insurance products and services to more than 4.2 million members in Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota and Wisconsin.
Source: Fremont Michigan InsuraCorp Inc.
Topics Mergers & Acquisitions Auto Michigan
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