Nationwide Mutual Insurance Company (“Nationwide Mutual”) and
Harleysville Mutual Insurance Company (“Harleysville Mutual”) and
Harleysville Group Inc. (NASDAQ:HGIC) (“Harleysville Group”) today
announced that they have entered into a definitive agreement under
which Harleysville will combine with Nationwide. Under the terms of
the agreement, Harleysville Mutual policyholders will become
policyholders and members of Nationwide Mutual and Nationwide
Mutual will acquire all of the publicly held shares of common stock
of Harleysville Group for $60.00 per share in cash.
Steve Rasmussen, Chief Executive Officer,
Nationwide (Photo: Business Wire)
Joining with the Harleysville companies will further strengthen
and diversify Nationwide’s business, expand its distribution
footprint, and increase its property and casualty (“P&C”)
commercial lines business. The combined organization, which will
have an estimated net surplus of more than $13.5 billion and over
$16 billion in annual direct written premiums, will be well
positioned for growth.
“This combination brings together two best-in-class companies
that share a mutual heritage and a focus on meeting the long-term
needs of our policyholders,” said Steve Rasmussen, Chief Executive
Officer of Nationwide. “With Harleysville’s expertise in commercial
lines and Nationwide’s complementary geographic distribution, there
will be a substantial opportunity to increase market share, while
also providing our combined agents and customers access to a
broader portfolio of insurance, financial and banking
products.”
“Harleysville is very pleased to join forces with Nationwide in
a transaction that will enable us to expand our business for our
independent agency partners and to enter important new markets from
a position of even greater strength,” said Michael Browne,
President and Chief Executive Officer of Harleysville. “We are
proud of our 96-year history and the longstanding success we and
our independent agencies have enjoyed as a result of our
partnership with one another. We remain committed to our trusted
independent agency partners and to the independent agency system. I
am confident that the combined organization will allow us to
deliver the best products and services available to grow our
independent agents’ books of business with us more effectively and
efficiently. We look forward to working with Nationwide’s talented
team and are very pleased that Nationwide has committed to
maintaining the Harleysville brand.”
Mr. Rasmussen added, “This transaction supports and accelerates
our strategy and mission to make it easy for agents and customers
to do business with Nationwide however they desire. Nationwide has
invested heavily in independent agent distribution, beginning with
our acquisition of Allied Insurance in 1998. While the Harleysville
transactions would expand our independent agency distribution
nationally, Nationwide also maintains a strong commitment to its
exclusive agency partners. We’re committed to making strategic
investments in all of our distribution channels as each is vital
and contributes to our mission.”
Transaction Structure and Terms
Under the terms of the agreement, Harleysville Mutual would
merge into Nationwide Mutual and Harleysville Group, Harleysville
Mutual’s publicly traded subsidiary, would be merged with a newly
formed subsidiary of Nationwide Mutual. Each public stockholder of
Harleysville Group would receive $60.00 per share in cash. Upon
closing, Harleysville Group would be a wholly owned subsidiary of
Nationwide.
Through the combination, Harleysville will join Nationwide’s
P&C independent agency business unit under the Harleysville
brand. In addition, Harleysville’s current headquarters in
Harleysville, PA, will serve as an integral part of the combined
company’s national, independent agency-based platform. Mr. Browne
will become the President and Chief Operating Officer of the
Harleysville company.
The transactions are subject to customary closing conditions,
including, among others, approvals from stockholders of
Harleysville Group; policyholders of Harleysville Mutual and
Nationwide Mutual; the Pennsylvania Insurance Department; the Ohio
Department of Insurance; and various other regulatory bodies. The
transactions are expected to close in early 2012. In connection
with the merger of Harleysville Group, Harleysville Mutual has
entered into a voting agreement with Nationwide Mutual under which
it has agreed to vote its 54% interest in Harleysville Group in
favor of the merger.
Bank of America Merrill Lynch and Jones Day advised
Nationwide in connection with the transactions. Credit Suisse
Securities (USA) LLC acted as financial advisor to Harleysville
Mutual and Harleysville Group in connection with the transactions,
Griffin Financial Group LLC provided additional financial advice to
Harleysville Mutual, including a fairness opinion to Harleysville
Mutual, and Keefe, Bruyette & Woods, Inc. provided additional
financial advice to Harleysville Group, including a fairness
opinion as to the consideration to be received by Harleysville’s
public stockholders. Stevens & Lee P.C. provided legal advice
to Harleysville Mutual. Ballard Spahr LLP acted as legal counsel to
Harleysville Mutual, and Fox Rothschild LLP acted as legal
counsel to Harleysville Group.
About Nationwide
Nationwide, based in Columbus, Ohio, is one of the largest and
strongest diversified insurance and financial services
organizations in the U.S. and is rated A+ by A.M. Best. The company
provides a full range of personalized insurance and financial
services, including auto insurance, motorcycle, boat, homeowners,
life insurance, farm, commercial insurance, administrative
services, annuities, mortgages, mutual funds, pensions and
long-term savings plans. For more information, visit
www.nationwide.com.
About Harleysville Mutual and Harleysville Group
Harleysville Insurance is a leading super-regional provider of
insurance products and services for small and midsized businesses,
as well as for individuals, and ranks among the top 60 U.S.
property/casualty insurance groups based on net written premiums.
As a Trusted Choice® company partner, Harleysville distributes its
products exclusively through a network of independent agents
primarily across 32 states. Harleysville is ranked in the most
recent InformationWeek 500, the publication’s annual listing of the
most innovative information technology organizations in the U.S.,
and has been included on the list in each of the last five years.
Harleysville Mutual Insurance Company owns approximately 54 percent
of Harleysville Group (NASDAQ: HGIC), a publicly traded holding
company for eight regional property/casualty insurance companies
collectively rated A (Excellent) by A.M. Best Company. Harleysville
Group is listed on the NASDAQ Global Select Market, which is
comprised of the top third of all NASDAQ member companies and has
the highest initial listing standards of any exchange in the world
based on financial and liquidity requirements. Further information
can be found on the company’s website at
www.harleysvillegroup.com.
Cautionary Notice Regarding Forward Looking
Statements
Certain statements in this press release contain forward-looking
statements, including statements relating to results of operations.
These forward-looking statements are based on current expectations,
estimates, forecasts and projections of future company or industry
performance based on management’s judgment, beliefs, current trends
and market conditions. Actual outcomes and results may differ
materially from what is expressed, forecasted or implied in any
forward-looking statement. Forward-looking statements made by
Nationwide Mutual, Harleysville Mutual or Harleysville Group may be
identified by the use of words such as “will,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “seeks,”
“estimates,” and similar expressions. There are a number of risks
and uncertainties that could cause actual results to differ
materially from the forward-looking statements included in this
document. For example, (1) Harleysville Group may be unable to
obtain stockholder approval required for the transactions;
(2) regulatory approvals required for the transactions may not
be obtained, or required regulatory approvals may delay the
transactions or result in the imposition of conditions that could
have a material adverse effect on Nationwide Mutual, Harleysville
Mutual or Harleysville Group or cause the parties to abandon the
transactions; (3) conditions to the closing of the
transactions may not be satisfied; (4) the business of
Nationwide Mutual, Harleysville Mutual or Harleysville Group may
suffer as a result of uncertainty surrounding the transactions; and
(5) Nationwide Mutual, Harleysville Mutual or Harleysville
Group may be adversely affected by other economic, business, and/or
competitive factors. These and other factors that could cause
Harleysville Group’s actual results to differ materially from those
expressed or implied are discussed under “Risk Factors” in
Harleysville Group’s most recent annual report on Form 10-K and
other filings with the Securities and Exchange Commission.
Nationwide Mutual, Harleysville Mutual and Harleysville Group
undertake no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Readers are cautioned not to place undue reliance on these
forward-looking statements.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed transactions. In connection with the
proposed transactions, a proxy statement of Harleysville Group and
other materials will be filed with the SEC. WE URGE INVESTORS TO
READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT HARLEYSVILLE GROUP AND THE PROPOSED TRANSACTIONS.
Investors will be able to obtain free copies of the proxy statement
(when available) as well as other filed documents containing
information about Harleysville Group on the SEC’s website at
http://www.sec.gov. Free copies of Harleysville Group’s SEC filings
are also available from Harleysville Group Inc., 355 Maple Avenue,
Harleysville, PA 19438-2297, Attention: Corporate Secretary.
Participants in the Solicitation
Harleysville Group and its executive officers, directors, other
members of management, employees and Harleysville Mutual may be
deemed, under SEC rules, to be participants in the solicitation of
proxies from Harleysville Group’s stockholders with respect to the
proposed transactions. Information regarding the executive officers
and directors of Harleysville Group is set forth in its definitive
proxy statement for its 2011 annual meeting filed with the SEC on
March 23, 2011. More detailed information regarding the identity of
potential participants, and their direct or indirect interests, by
securities holdings or otherwise, will be set forth in the proxy
statement and other materials to be filed with the SEC in
connection with the proposed transactions.
Nationwide, the Nationwide frame mark, and On Your Side are
service marks of Nationwide Mutual Insurance Company.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50012388&lang=en
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