Liberty Mutual to acquire State Auto Group for $52 per share

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• Liberty Mutual Holding Company, State Automobile Mutual Insurance Company, and State Auto Financial Corporation (NASDAQ:STFC) have signed a definitive agreement under which Liberty Mutual would acquire State Auto Group in a deal valued at $2.29 billion.
• Per terms, State Auto mutual members will become mutual members of Liberty Mutual, and Liberty Mutual will acquire all of the publicly held shares of common stock of State Auto Financial for $52 per share in cash.
• The offer price per share represents a premium of ~201% over STFC's closing share price on July 09, 2021.
• The transaction was approved by the State Auto Financial board of directors, as well as the State Auto Mutual board of directors.
• In connection with the merger of State Auto Financial, State Auto Mutual has entered into a voting agreement with Liberty Mutual under which it has agreed to vote its 58.8% interest in State Auto Financial in favor of the merger.
• The deal is expected to close in 2022, subject to necessary approvals.
• Shares +185% premarket.

Comments

[Weather Man]

Pretty amazing premium

[HaroldRamis]

@Weather Man imagine being short this thing. not sure why you would be, but who knows

[Slade_01]

State Auto increased rate dramatically this year. My agent had just changed the house and car to them a year ago due to Farmers excessive rates. Looks like I will be shopping around again next summer.

[HaroldRamis]

congrats to the many analysts here that nailed this one

piper just downgraded the target a few days ago from 20 to 18

they pay those guys ??

[sjm- cfa]

Mutual co.s are kind of strange public beasts, in part because the corporate structure to facilitate the conversion. With the mutual owning a greater than 50% position and the large premium to existing price the deal will likely go through. Would appear the BIG price premium to prior price reflects a very competitive process IMO. I'm not aware of direct and similarly structured, microcap peers, maybe others can chime in? Within insurance, I currently own AFL, BRK.b, FRFHF, ORI & PRU.

[ggravelle]

@sjm- cfa Thank you for the insightful comments. I own Berkshire, Markel, Alleghany, Fairfax, Chubb, Allstate, Everest, Travellers and Statey.

[ggravelle]

Who's your daddy!? It's your birthday! Go Shorty!

[sjm- cfa]

Looks like they are paying 2.4 X BV (Q1). This must have been a competitive bid because the premium is huge.

[ArminBrack]

@sjm- cfa but no real listed peers, right? At least not in the same league as far as market cap is concerned?