Chinese conglomerate Fosun International Ltd. is closing out 2014 with a plan to buy Meadowbrook Insurance Group for $433 million.
The deal, at $8.65 per share, will allow Fosun to gain a big beachhead in the U.S. property/casualty market, according to the M&A announcement. Both Meadowbrook’s and Fosun’s boards have approved the transaction. Pending regulatory approvals and other closing conditions, it is expected to close in the 2015 second half.
While Meadowbrook will have an overseas owner, it will remain headquartered in Michigan and keep its name. Meadowbrook has 28 U.S. locations and includes a number of agencies, claims and loss prevention facilities, self-insured management organizations and six property/casualty insurance underwriting companies, according to the company.
Fosun, with more than $50 billion in assets globally, has about a third of its resources invested in insurance businesses in areas including property/casualty, reinsurance and life insurance. In August 2014, it snatched up a 20 percent equity interest in Ironshore Inc.
Meadowbrook gains a number of things from the deal. A $433 million offer reflects a 24 percent premium over Meadowbrook’s closing stock price on Dec. 29, 2014. What’s more, Meadowbrook President and CEO Robert Cubbin said in prepared remarks that the acquisition will help boost its capital resources and underwriting. He added that Meadowbrook’s sale is the culmination of a strategic review intended to “maximize shareholder value.”
“Combining with Fosun further strengthens our capital base as we continue to focus on supporting the needs of our customers, partners and policyholders, improving our underwriting performance and driving profitability,” Cubbin said in a statement.
Last February, Cubbin said that Meadowbrook had made progress ending and running off underperforming areas of its business, and that “strong remedial measures” were working to improve its bottom line.
Source: Fosun International/Meadowbrook