Cincinnati-based insurer American Financial Group Inc. announced that it and its subsidiary, American Financial Corporation (AFC), have agreed to amend their pending merger agreement, to provide for an increase in the consideration to be received by holders of AFC Series J Preferred Stock in the proposed merger.
Under the amended merger agreement, AFG and AFC will merge, pursuant to which Series J preferred shareholders (representing 21 percent of AFC’s voting securities) will receive $26 per share in common stock of AFG, rather than $25 per share as contemplated prior to the amendment.
The increase followed discussions with two unaffiliated institutional shareholders (who collectively own approximately 325,000 shares of Series J Preferred Stock) and AFC’s Special Committee of independent directors. In consideration for the increase in the proposed merger consideration, AFG has an understanding with each of these holders to vote their shares in favor of the merger at AFC’s special shareholders meeting to be held on November 20, 2003.
AFC’s Board of Directors has declared the semi-annual dividend of $1 per share on the Series J Preferred Stock. The dividend is payable on Nov. 1, 2003 to holders of record on Oct. 15, 2003. The Nov. 1, 2003 dividend on the Series J Preferred Stock will be paid in cash. If the merger is approved, accrued dividends will also be paid in cash, at a rate of $.0055 per day, from Nov. 1, 2003 to the date of the merger.
As previously reported, it is expected that (i) the conversion of AFC’s Series J Preferred Stock to AFG common equity and (ii) the elimination of the deferred tax liabilities associated with AFC’s holding of AFG stock, will result in a 12% to 15% increase in AFG shareholders’ equity.
The transaction is subject to approval at the meeting by a majority of the outstanding shares of Series J Preferred Stock and a majority of those shares of Series J Preferred Stock voting on the matter which are not held by certain affiliates of AFG, and certain other conditions. Proxy statements describing the transaction will be mailed in the next several days to holders of AFC Series J Preferred Stock as of the close of business on September 30, 2003.
Topics Mergers & Acquisitions Trends
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