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Tower Group plummets as merger deal called into question

  • Downgrading Tower Group (TWGP -13.9%) to Underperform and halving its price target to $1.50, KBW notes an "elevated risk" of the merger with AmTrust (AFSI -1.1%) subsidiary ACP Re being restructured at a lower price (though it still expects the deal to close). At issue is the release of Tower's 2013 10-K which showed a big decline in book value to $1.67 per share at year's end from $3.62 at the end of Q3.
  • The 2-day decline for Tower since the downgrade is about 21%.
  • Buy the dip says Blue Ridge Buffettologist in an SA Pro article embargoed until tomorrow morning.
Comments (6)
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
    Buy the dip? Oh man. Haha. I'll pass.
    7 May, 01:41 PM Reply Like
    , contributor
    Comments (1141) | Send Message
    I DID buy the dip, they have offer and are in final stages of the buyout at 3 bucks... easy 33% anyone thinking it won't go thru ? it already passed...
    7 May, 04:37 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
    It's not going through at 3.
    7 May, 04:51 PM Reply Like
  • D Reed
    , contributor
    Comments (60) | Send Message
    Very curious on this stock. For those claiming knowledge of deal already passing or why it won't go thru at $3 please share your reasons with support. Blanket opinion statements are of no use to anyone.
    7 May, 05:22 PM Reply Like
    , contributor
    Comments (1141) | Send Message
    D Reed only thing stopping it from going thru is SEC, they are quite on the subject & possible law suits that will prevent the merger/buyout from going thru prior to Sept 15th 2014. What (IF ANY) law suits that could prevent it is not known & those suits could prevent the $3/share buyout. They have sent proxy voting notices out and has on-line share voting already voted and in February alone there were 4~6 13G filings of big HFs buying greater than 5% of (TWGP), Black Rock bought 6+%. These buys were AFTER the buyout was announced & you can bet that is some 20~25% of outstanding shares will vote FOR the buyout. These guys bought it for the bump the shares were trading below the price level at the time.


    The main reason it needs to go thru by the 15th of Sept is they have some debt they have $ to pay, but would put them under their required cash on hand levels as insurance company. That could hamper them from being able to underwriter additional policies & may force some to be revoked. that is the issue IF they dont call the special meeting (which is not yet been done) and confirm the voting FOR the merger. As it stands now it has $5.17 cash on hand.


    7 May, 06:04 PM Reply Like
  • Mr. Tanker
    , contributor
    Comments (3) | Send Message
    What am I missing? Unless there was something underhanded or other conditions attached, AmTrust made the deal and cannot back out of the mergr at $3 per. Wel, of course they can, but I'd guess that litigation would result.
    8 May, 09:20 AM Reply Like
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