Ala.-Based Alfa Buyout Plan Opposed in Shareholders’ Suit

Eight shareholders have sued to block Montgomery, Ala-based Alfa Corp.’s $639 million proposal to buy out minority shareholders, claiming it’s an unfair price.

The suit was filed in the Chancery Court of Delaware, where the insurer is incorporated.

The plaintiffs own almost 900,000 shares, and four were longtime employees of Montgomery-based Alfa, which sells auto, home and health insurance.

Tuscaloosa, Ala., shareholder Jack Kubiszyn claims company insiders are “trying to steal the company at an unfair price.”

The shareholders who sued said they oppose the plan of majority shareholders – three affiliated companies with long-standing ties to the publicly traded Alfa Corp. parent company – to buy them out for $17.60 a share.

The suit, first reported Aug. 17 by The Birmingham News, also says most of the directors and officers of the three affiliates are directors and officers of Alfa Corp., and that is a conflict of interest for them to sit on both sides of the proposed deal.

Alfa, which grew out of the Alabama Farm Bureau, said in a statement the proposed buyout of minority shareholders by Alfa Mutual, Alfa Mutual Fire and Alfa Mutual General is transparent, fair and in the best interests of the company.

Together, the three affiliates proposing the takeover own 55 percent of Alfa Corp. stock.

The suit seeks unspecified damages and class-action status on behalf of all similar shareholders.

At least two other suits cite similar claims about the Alfa deal and seek class-action status.

Alfa Mutual companies spokesman Dave Rickey said the suit is unfounded and will be vigorously defended.

He also said a special committee of independent directors is looking out for the interests of minority shareholders and has hired arms-length legal and financial advisers to evaluate the offer.

The $17.60 offer represented a 16 percent premium to Alfa’s closing price of $15.20 on July 17, the day before the offer was made public.

Information from: The Birmingham News