On August 24, 2007, the Company and MGIC Investment Corporation (MGIC) entered into a Stipulation to Set Briefing Schedule and Hearing Date for Motion of MGIC for Specific Performance (the Stipulation). The Stipulation was filed with the Federal District Court for the Eastern District of Wisconsin in MGIC Investment Corporation v. Radian Group Inc. pending in that court (the Litigation).
Among other things, the Stipulation provides that subject to the terms and conditions of the Merger Agreement, dated as of February 6, 2007, as amended (the Merger Agreement), the Closing Date for the merger between the Company and MGIC will be in accordance with Section 9.1 of the Merger Agreement, except that in no event shall the Closing take place before five business days after final resolution of the Litigation. Section 9.1 of the Merger Agreement provides that the Closing Date is to occur no later than five business days after all closing conditions (other than those to be satisfied at Closing) have been satisfied or waived, including receipt of all regulatory approvals.
There is very little to read into this litigation development other than to acknowledge that RDN is clearly intent of playing out this scenario in court if MTG continues to proceed on the current course. The critical question is: will MTG pursue a merger termination if RDN continues to remain unfazed as the court dates are established and come closer? As noted previously, the general impression is that RDN can salvage this deal if they do not back down to MTG's legal maneuvers.
Again, reconciliation at this point does not seem likely. However, legal proceedings have a very strong tendency to quickly change sentiment, especially if the aggressor (MTG in this case) comes to realize that its case may not only be challenged, but that it may not have the standing or impact initially anticipated.
In other words, as long as RDN remains committed to its perceived legal merits, the chances of the deal actually moving forward will comminute to exist, and even increase, in the near future. Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.