Leading Proxy Advisory Firm Glass Lewis Recommends AmTrust Stockholders Vote "FOR" Proposed Going-Private Transaction
26 May 2018 - 3:18AM
AmTrust Financial Services, Inc. (Nasdaq:AFSI) (the "Company" or
"AmTrust") today announced that leading independent proxy advisory
firm Glass Lewis & Co. (“Glass Lewis”) has recommended that
AmTrust stockholders vote “FOR” the Company’s previously announced
merger agreement at the Special Meeting of Stockholders on June 4,
2018. Under the terms of the merger agreement, Evergreen
Parent, L.P. will acquire for $13.50 per share in cash the
approximately 45% of the Company's shares of common stock that the
Karfunkel-Zyskind Family and certain of its affiliates and related
parties do not already own or control, subject to regulatory
approval and other closing conditions.
In its May 24, 2018 report, Glass Lewis acknowledged that the
value achieved in the going-private transaction represents the
highest and most certain value available for public
stockholders:1
“Given the
rigor of these negotiations and the need to offer Stone Point
concessions to accept the deal at $13.50 per share, as well as the
absence of any increased offer since Icahn's public involvement in
the stock, it does not appear likely that the special committee
could extract a higher price.”“The purchase price falls above or
within the valuation ranges derived in the advisor’s comparable
companies, precedent transactions and dividend discount analyses.
The exit price also represents what is, in our view, an attractive
premium to the unaffected trading price of AmTrust shares and falls
well above the average closing share price over the one-month and
three-month periods trailing announcement of the initial
offer.” |
|
Regarding the independent and rigorous process that the Special
Committee of the AmTrust Board of Directors took in evaluating the
going-private proposal, Glass Lewis stated:
“The Company
indicates the special committee was given free range in its
negotiations with the Stone Point and the KZ Family and to consider
potential alternatives on behalf of unaffiliated shareholders
before unanimously approving the proposed transaction agreement. In
this case, we believe generally reasonable measures have been taken
to safeguard the interests of unaffiliated shareholders in the
transaction proceedings. In particular, we note that the proposed
transaction agreement includes a "majority of the minority" vote
requirement, which we believe serves an important role in
protecting the interests of minority shareholders in related-party
transactions.” |
|
The Glass Lewis report also highlights the continued business
risk facing the Company and the transfer of these risks to the
buyer group as a result of this transaction:
“As it
stands, we do not believe Icahn has proposed a clear or credible
plan to achieve the valuation range indicated in its presentation
to shareholders and we note that this valuation reflects the
long-term view of the Company’s potential without discounting for
the risks and uncertainties associated with achieving that
potential.”“On the other hand, the Special Committee Case
Projections also do not capture the potential downside associated
with a possible ratings downgrade. We see that the proposed
consideration falls well above the fair value range derived in a
version of the dividend discount analysis prepared by the advisor
for reference purposes only that utilizes a downside case prepared
by management that is intended to reflect the negative consequences
of a ratings downgrade to the Company’s insurance business ($5.19
to $7.10).” |
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______________________________________
1 Permission to use quotations herein neither sought nor
obtained
AmTrust issued the following statement regarding the reports
recently issued by proxy advisory firms Institutional Shareholder
Services Inc. (“ISS”) and Glass Lewis:
We are
pleased that Glass Lewis recognizes the significant, certain cash
value that will be delivered to AmTrust’s public stockholders as a
result of this transaction and that Glass Lewis supports the
recommendation from the Board’s independent Special Committee that
AmTrust stockholders vote “FOR” the proposed merger. However,
we strongly believe that ISS reached the wrong conclusion in
failing to recommend that AmTrust stockholders vote “FOR” the
proposed merger.Despite significant actions taken, the
underperformance of AmTrust’s stock shows that the public markets
are not accepting of the Company's business risks. The going
private transaction eliminates these risks for public stockholders
and maximizes the value of their shares. It is the culmination of
an independent process overseen by a Special Committee composed
solely of independent directors. The Special Committee was assisted
by independent financial and legal advisors, which were carefully
and promptly selected following interviews with several firms. The
Special Committee considered a wide range of alternatives to
determine whether greater value to the merger could be achieved and
unanimously determined that the merger delivers the highest value
to public stockholders. The leverage the Special Committee had in
negotiating the transaction was its ability to reject this or any
other transaction, not simply open the process as ISS has
suggested.The merger provides immediate liquidity at a significant
premium to AmTrust’s public stockholders. The $13.50 per share cash
offer represents a 33% premium to AmTrust’s unaffected stock price
and a 10% increase in value over the buyer group’s initial cash
proposal following intense negotiations by the Special Committee.
Notably, Evergreen Parent has communicated to the Company that they
are not willing to consider any other transaction, and no price
increases are available.Absent this transaction, independent
industry analysts agree with the Board's assessment that the value
of AmTrust's shares is likely to decline and to continue trading at
depressed levels given the challenges facing the Company and its
majority ownership structure. AmTrust stockholders are faced with a
choice: vote for the transaction and the certain, maximum value it
provides, or continue to endure the underperformance and business
risks that market trends indicate public stockholders do not
want.The AmTrust Board believes the choice is clear and continues
to unanimously recommend that stockholders follow the Glass Lewis
recommendation and vote “FOR” the proposed transaction.As it
relates to the establishment of the record date, AmTrust noted the
record date was set and announced in accordance with applicable
NASDAQ rules and law. The Company conducted a broker search 20
business days before the record date as required by SEC rules, and
thus the record date would have been available to market
participants through “a simple phone call,” as acknowledged by
ISS. |
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AmTrust stockholders who have questions or need assistance
invoting their shares, please contact AmTrust’s
solicitor:MacKenzie Partners, Inc.1407
Broadway, 27th FloorNew York, New York 10018(212) 929-5500 (Call
Collect)Call Toll-Free (800) 322-2885Email:
Amtrust@mackenziepartners.com |
|
About AmTrust Financial Services, Inc.AmTrust
Financial Services, Inc., a multinational insurance holding company
headquartered in New York, offers specialty property and casualty
insurance products, including workers' compensation, commercial
automobile, general liability and extended service and warranty
coverage through its primary insurance subsidiaries rated "A"
(Excellent) by A.M. Best. AmTrust is included in the Fortune 500
list of largest companies. For more information about AmTrust visit
www.amtrustfinancial.com.
Forward Looking StatementsThis news release
contains certain forward-looking statements that are intended to be
covered by the safe harbors created by the Private Securities
Litigation Reform Act of 1995. When we use words such as
"anticipate," "intend," "plan," "believe," "estimate," "expect," or
similar expressions, we do so to identify forward-looking
statements. Examples of forward-looking statements include the
plans and objectives of management for future operations, including
those relating to future growth of our business activities and
availability of funds, and estimates of the impact of material
weaknesses in our internal control over financial reporting, and
are based on current expectations that involve assumptions that are
difficult or impossible to predict accurately and many of which are
beyond our control. Actual results may differ materially from those
expressed or implied in these statements as a result of significant
risks and uncertainties, including, but not limited to, the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement, including as
a result of any downgrade in the A.M. Best Financial Strength
Rating of the Company’s insurance subsidiaries below “A”, which
risk may be heightened due to the fact that such ratings are
currently “under review with negative implications” and that the
Company has previously disclosed material weaknesses in its
internal controls over financial reporting, the inability to obtain
the requisite stockholder approval for the proposed merger or the
failure to satisfy other conditions to completion of the proposed
merger, risks that the proposed transaction disrupts current plans
and operations, the ability to recognize the benefits of the
merger, the amount of the costs, fees, expenses and charges related
to the merger, non-receipt of expected payments from insureds or
reinsurers, changes in interest rates, changes in tax laws, the
effect of the performance of financial markets on our investment
portfolio, the amounts, timing and prices of any share repurchases
made by us under our share repurchase program, development of
claims and the effect on loss reserves, accuracy in projecting loss
reserves, the cost and availability of reinsurance coverage, the
effects of emerging claim and coverage issues, changes in the
demand for our products, our degree of success in integrating
acquired businesses, the effect of general economic conditions,
state and federal legislation, regulations and regulatory
investigations into industry practices, our ability to timely and
effectively remediate the material weakness in our internal control
over financial reporting and implement effective internal control
over financial reporting and disclosure controls and procedures in
the future, access to public markets to raise debt or equity
capital, risks associated with conducting business outside the
United States, the impact of Brexit, developments relating to
existing agreements, disruptions to our business relationships with
Maiden Holdings, Ltd. or National General Holdings Corp., breaches
in data security or other disruptions with our technology, any
inability to keep pace with technological advances, heightened
competition, changes in pricing environments, changes in asset
valuations and the results of legal proceedings. Additional
information about these risks and uncertainties, as well as others
that may cause actual results to differ materially from those
projected, is contained in our filings with the SEC, including our
Annual Report on Form 10-K and our quarterly reports on Form 10-Q.
The projections and statements in this news release speak only as
of the date of this news release and we undertake no obligation to
update or revise any forward-looking statement, whether as a result
of new information, future developments or otherwise, except as may
be required by law.
Additional Information and Where to Find ItIn
connection with the proposed transaction, the Company has filed
with the Securities and Exchange Commission (the “SEC”) a proxy
statement on Schedule 14A and may file other documents with the SEC
regarding the proposed transaction. This letter is not a substitute
for the proxy statement or any other document that the Company may
file with the SEC. INVESTORS IN AND SECURITY HOLDERS OF THE COMPANY
ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS.
Investors and security holders may obtain free copies of the proxy
statement and other documents filed with the SEC by the Company
through the web site maintained by the SEC at www.sec.gov or by
contacting the investor relations department of the Company or
MacKenzie Partners, Inc., the Company’s proxy solicitor.
Participants in the SolicitationThe Company and
its directors and executive officers may be deemed to be
participants in the solicitation of proxies in connection with the
proposed transaction. Information regarding the Company’s directors
and executive officers, including a description of their direct
interests, by security holdings or otherwise, is contained in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2017 as amended on Form 10-K/A filed with the SEC on April 23,
2018. A more complete description is available in the proxy
statement on Schedule 14A filed with the SEC on May 4, 2018. You
may obtain free copies of these documents as described in the
preceding paragraph.
Contacts
AmTrust Financial ServicesChaya CooperbergChief
Communications Officer & SVP Corporate
Affairschaya.cooperberg@amtrustgroup.com(646) 458-3332
Jisoo SuhDirector of Investor
Relationsjisoo.suh@amtrustgroup.com(646) 458-3367
Hunter HoffmannGlobal Director of Public
RelationsHunter.Hoffmann@amtrustgroup.com(646) 458-3362
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