By Lisa Kerner
Charlotte, N.C., June 22 - Specialty Underwriters' Alliance, Inc. agreed to be acquired by Tower Group, Inc. in a cash-and-stock deal valued at approximately $107 million.
Under the companies' definitive agreement, Specialty Underwriters' Alliance shareholders will receive 0.28 shares of Tower common stock valued at $6.72 for each share of Specialty Underwriters' Alliance common stock or class B common stock held.
The value of the Tower shares is based on Tower's closing stock price of $24.00 on Friday.
The exchange ratio is subject to adjustment, a Tower news release said.
Both companies' boards of directors have approved the transaction, which is expected to close by the end of the year.
A $3 million termination fee is included in the agreement, according to a form 8-K filed with the Securities and Exchange Commission.
"After a careful review of our strategic alternatives, our board has concluded that this transaction provides our shareholders with the best opportunity to enhance shareholders' value," Specialty Underwriters' Alliance president and chief executive officer Courtney Smith said in a news release.
"In addition, our affiliation with Tower will allow us to improve our profitability and take advantage of the current market opportunities by accessing Tower's A- rating by A.M. Best Company and strong capitalization," Smith said.
Specialty Underwriters' Alliance, a Chicago commercial insurance provider, was advised by FBR Capital Markets & Co.
Tower Group is a New York property and casualty insurance company.
| Acquirer: | Tower Group, Inc.
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| Target: | Specialty Underwriters' Alliance, Inc.
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| Announcement date: | June 22
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| Price per share: | 0.28 shares of Tower
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| Termination fee: | $3 million
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| Expected closing: | End of 2009
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| Stock price of acquirer: | Nasdaq: TWGP: $24.00 on June 19
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| Stock price of target: | Nasdaq: SUAI: $3.96 on June 19
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