Quarter 1 2018
Since the 2018 tax breaks took effect, the controlling family of AmTrust Financial Services (NASDAQ:AFSI) has made moves to buy back shares and to eventually become no longer a publicly traded company. This factor played along with the decreased value in shares from the 2015 high of $33.54 to the end of 2017 low of below $10.
On March 1st, AmTrust announced that they would be offering $13.50 in cash for each share of AmTrust common to the shareholders who are not affiliated with the Karfunkel-Zyskind Family.
This was rejected by shareholders and AmTrust Financial Services shareholder Arca Capital commends shareholders for rejecting Zyskind/Karfunkel family’s “absurdly low” $13.50 per share offer for taking AFSI private and suggest that $22 is “fair value.” The second rejection after January’s initial proposal of $12.25 per share.
Billionaire investor Carl Icahn, who owns a 9.4% stake in the company, had strongly opposed the go-private deal and sued AmTrust and the controlling family, accusing them of trying to take the insurer private at the wrong time and the wrong price.
Quarter 2 2018
Earlier this month, though, the Zyskind/Karfunkel family agreed to raise their price to $14.75 per share, a deal that Carl Icahn supports. AFSI was up to $14.50 in premarket trading that day (6/7/18). A move that secured the support of Carl Icahn. “By raising the merger price to $14.75, over $100 million of incremental value has been created for public stockholders,” Mr. Icahn said Thursday.
Mr. Icahn also demands that AmTrust changes the record date in advance of any vote to allow shares to vote that were purchased between April 5, 2018 and May 21, 2018.
That date would allow Carl Icahn, who who amassed a 9.4% stake in AFSI between April 26, 2018 and May 17, 2018, to vote on the going-private proposal.
The revised offer, however, failed to appease another shareholder opposed to the deal — Arca Capital (4.2% shareholder). The firm reiterated that it sees $22 per share as the “fair value” for AmTrust.
“We are ready to sit down and negotiate with Barry Zyskind, George Karfunkel, Leah Karfunkel and Stone Point Capital to negotiate a fair deal in good faith with an offer in excess of $22 per share,” Arca Capital Chairman Pavol Krupa said in a statement. “If no deal can be reached, we are very happy for AmTrust to remain public.”
6/21/2018
The take out bid of $14.75 was voted on this morning by AmTrust’s outside shareholder and was approved with 67.4% of their vote.
The vote passed with the support of 79.8 percent of common voting stock backing the deal, while the public shareholders – the 45 percent of the shares not connected to CEO Barry Zyskind or his wife Leah Karfunkel’s family – voted 67.4 percent in favour.
In the statement today the carrier said the deal, which values it at around $2.95bn, is now expected to close in the second half of this year subject to regulatory approvals.
Icahn, whom was originally a dissenter, will make about $30 million on an investment of about $240 million in AmTrust stock and forward derivative contracts. That’s a better than 12% gross return on about a month’s work.
7/3/18
A.M.Best changes AmTrust’s financial strength from A to A- but changes outlook to stable. Last year AmTrust was placed under review when adverse loss development was noted on their book from 2010 to 2014. This negative outlook was changed after Best’s review concluding on July 3rd and Best noted AmTrust’s stength on it’s balance sheet. This news did not impact AmTrust’s move to go private.
–PEOCompass will continue to update you with news regarding AmTrust’s potential merger as it happens.
Sources:
- https://seekingalpha.com/news/3362335-amtrust-shareholder-arca-sees-22-share-fair-value-going-private-deal
- https://www.barrons.com/articles/icahn-squeezes-a-better-deal-from-amtrust-1528379765
- http://ir.amtrustfinancial.com/releasedetail.cfm?releaseid=1059225
- http://www.businessinsurance.com/article/20180607/NEWS08/912321867/AmTrust-agrees-to-sweetened-$295-billion-buyout-offer?utm_campaign=BI20180607BreakingNewsAlert&utm_medium=email&utm_source=ActiveCampaign
- https://www.re-insurance.com/manda/amtrust-shareholders-approve-stone-point-go-private-deal/1215.article?utm_medium=email&utm_campaign=re-insurancecom%20teaser%20template%2021%20June%202018%20copy&utm_content=re-insurancecom%20teaser%20template%2021%20June%202018%20copy+CID_271c61b3658a4d2b87b79a0b56869bdf&utm_source=Campaign%20Monitor&utm_term=AmTrust%20shareholders%20approve%20Stone%20Point%20go-private%20deal&adredir=1
- https://www.businessinsurance.com/article/20180705/NEWS08/912322482/AM-Best-rating-agency-downgrades-AmTrust-Group-Carl-Icahn-?utm_campaign=BI20180705DailyBriefing&utm_medium=email&utm_source=ActiveCampaign&utm_campaign=BI20180705DailyBriefing&utm_medium=email&utm_source=ActiveCampaign
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