CHICAGO and BLUE BELL, Pa., June
10 /PRNewswire-FirstCall/ -- Old Republic International
Corporation (NYSE: ORI) ("Old Republic") and PMA Capital
Corporation (Nasdaq: PMACA) ("PMA") announced today that the
companies have entered into a merger agreement pursuant to which
Old Republic will acquire all of PMA's outstanding common stock.
Under the terms of the agreement approved by the boards of
directors of both companies, Old Republic will issue 0.55 shares of
Old Republic common stock in exchange for each outstanding common
share of PMA. Depending on the price of Old Republic's common stock
preceding the closing of the merger, the exchange ratio may be
adjusted upwards or downwards, but will not exceed 0.60 or be less
than 0.50. The initial exchange ratio represents a premium of
approximately 15% to the closing price of PMA's common stock on
June 8, 2010, the last trading day
before the signing of the merger agreement. As of the latter date
the transaction therefore attributes a total enterprise value for
PMA of approximately $365 million,
consisting of $228 million for PMA
common shares and $137 million for
its debt.
The transaction is expected to close during the third quarter of
2010, subject to approval by PMA's shareholders, regulatory
approvals and other customary closing conditions.
Speaking from PMA's headquarters, Vincent Donnelly, President and CEO, said that
"We are pleased that we were able to reach this agreement with Old
Republic, and we believe that this merger will have positive
benefits to our shareholders, clients and employees. We expect that
this transaction will enable our shareholders to realize greater
long-term value than if we continued to operate as a stand-alone
entity. We also believe that the additional financial
strength and stability of a larger well diversified company will
benefit our clients, employees and other stakeholders.
Following the closing, we will continue to do business as the
PMA Companies, and we will maintain our company headquarters in
Blue Bell, Pennsylvania with our
experienced leadership team and local service locations. We are
excited about the opportunity that Old Republic presents for the
continued profitable growth of our businesses."
In announcing the merger from Old Republic's Chicago headquarters, Al Zucaro. Chairman and CEO stated that ". . .
we are extremely pleased to welcome PMA's management and all of its
associates to our family of companies. This merger is
consistent with our long term strategic plan to grow our General
Insurance business. The alliance of our two companies results in a
well-capitalized insurance group appropriately positioned to take
advantage of the many opportunities and synergies which will no
doubt be available to us. The two companies share a
commitment to conservative underwriting and a focus on select
industries important to the American economy. We are
convinced that the long-term orientation of the decision to effect
this merger will at once provide greater scale, balance and
diversification for our general insurance business, and produce
enhanced future benefits for the combined shareholder groups."
B of A Merrill Lynch is acting as exclusive financial advisor
and Ballard Spahr LLP as legal counsel to PMA Capital Corporation.
Macquarie Capital acted as financial advisor to Old
Republic.
Background
PMA Capital Corporation, headquartered in Blue Bell, Pennsylvania, is a holding company
whose operating subsidiaries provide insurance and fee-based
services. Insurance products include workers' compensation and
other commercial property and casualty lines of insurance.
Fee-based services include third party administrator, managing
general agent and program administrator services. The operating
subsidiaries are marketed under PMA Companies and include The PMA
Insurance Group, PMA Management Corp., PMA Management Corp. of New
England and Midlands Management Corporation. As of March 31, 2010, PMA had assets of approximately
$2.4 billion and common shareholders'
equity of $418 million or
$12.96 per share. The current stock
market valuation is approximately $199
million or $6.17 per share.
For additional information visit www.PMACompanies.com.
Chicago-based Old Republic
International Corporation is an insurance holding company whose
subsidiaries market, underwrite and provide risk management
services for a wide variety of coverages, principally in the
property and liability, mortgage guaranty, and title insurance
fields. One of the nation's 50 largest publicly held insurance
organizations, Old Republic has assets of approximately
$14.3 billion and common
shareholders' equity of nearly $4.0
billion or $16.90 per share.
Its current stock market valuation is approximately
$3.1 billion or $12.86 per share. For the latest news releases
and other corporate documents on Old Republic International visit
www.oldrepublic.com.
Forward-looking Statements
This press release includes certain forward-looking statements.
The forward-looking statements are subject to known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Old Republic or PMA
to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. These factors include, among others,
the timing and completion of the merger, the ability to obtain
regulatory and other approvals relating to the merger, and the
effect of this announcement on PMA's customer relationships,
operating results and business generally. These factors also
include, but are not limited to, the risks and uncertainties
described in Old Republic's and PMA's reports filed with the
Securities and Exchange Commission ("SEC"). These filings include
the Annual Reports on Form 10-K for the year ended
December 31, 2009, which are available at www.sec.gov., Old
Republic and PMA disclaim any intention or obligation to update or
revise any forward-looking statements, except as required by
law.
Additional Information
This press release does not constitute an offer for the sale
or exchange of securities. Old Republic will file with the
SEC a registration statement on Form S-4 that will include
PMA's proxy statement and will also constitute a prospectus
of Old Republic. Old Republic and PMA also plan to file other
documents with the SEC regarding the proposed transaction. A
definitive proxy statement/prospectus will be sent to PMA's
shareholders. PMA SHAREHOLDERS ARE ADVISED TO READ THE PROXY
STATEMENT AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE MERGER, OLD REPUBLIC AND PMA.
Shareholders may obtain free copies of the proxy statement and
other documents filed by PMA (when available), at the SEC's Web
site at www.sec.gov or at PMA's Web site at www.pmacapital.com. The
proxy statement and such other documents may also be obtained for
free, when they become available from PMA, by directing such
request to Investor Relations, PMA Capital Corporation, 380 Sentry
Parkway, Blue Bell, Pennsylvania,
telephone: 610-397-5298.
PMA and its directors, executive officers and other members of
its management and employees may be deemed to be participants in
the solicitation of proxies from PMA Capital's shareholders in
connection with the proposed transaction. Information concerning
the interests of those persons is set forth in PMA's proxy
statement relating to the 2010 annual meeting of shareholders and
annual report on Form 10-K for the fiscal year ended
December 31, 2009, both filed with the SEC, and will also be
set forth in the proxy statement relating to the transaction when
it becomes available.
SOURCE Old Republic International Corporation