AmTrust shareholders to receive $13.50 per share
in cash
AmTrust Financial Services,
Inc. (Nasdaq:AFSI)
(“AmTrust” or the “Company”) announced today that it has entered
into a definitive agreement with Evergreen Parent, L.P., an entity
formed by private equity funds managed by Stone Point Capital LLC
(“Stone Point”), together with Barry D. Zyskind, Chairman and CEO
of AmTrust, George Karfunkel and Leah Karfunkel (collectively, the
“Karfunkel-Zyskind Family”), in which Evergreen Parent will acquire
the approximately 45% of the Company’s issued and outstanding
common shares that the Karfunkel-Zyskind Family and certain of its
affiliates and related parties do not presently own or
control. The transaction values the fully diluted equity of
the Company at approximately $2.7 billion, excluding the Company’s
outstanding preferred stock.
Under the terms of the proposed merger, AmTrust common
shareholders who are not affiliated with the Karfunkel-Zyskind
Family (the “Public Shareholders”) will receive $13.50 in cash for
each share of AmTrust common stock they hold. This represents
a premium of 33% to the Company’s unaffected closing common stock
price on January 9, 2018, the last trading day before Stone Point
and the Karfunkel-Zyskind Family announced their proposal to
acquire all of the outstanding common shares of AmTrust that the
Karfunkel-Zyskind Family did not already own or control. The
Karfunkel-Zyskind Family and certain of its affiliates and related
parties will rollover their shares in the Company for interests in
Evergreen Parent. Each share of the Company’s currently
outstanding preferred stock will remain outstanding and it is
expected that they will continue to be listed on the New York Stock
Exchange following the consummation of the transaction.
The proposed merger is anticipated to close in the second half
of 2018, subject to satisfaction or waiver of the closing
conditions, including approval by regulatory authorities and the
Company’s shareholders, including approval by a majority of the
shares of the Company not owned or controlled by the
Karfunkel-Zyskind Family, their children, senior management or
their respective affiliates and certain related parties. The
Company will file a Current Report on Form 8-K with the Securities
and Exchange Commission which will more fully describe the terms
and conditions of the proposed merger.
AmTrust’s Board of Directors has unanimously approved the
proposed merger based upon the unanimous recommendation of a
Special Committee of the Board of Directors, which was composed of
independent directors not affiliated with the Karfunkel-Zyskind
Family and advised by its own financial and legal advisors.
The Special Committee and the Board each recommend that the
Company’s Public Shareholders approve the merger and adopt the
merger agreement.
Don DeCarlo, Chairman of the Special Committee, said: “The
Special Committee and its advisors conducted an independent process
and careful review of the proposal, with a focus on obtaining the
best outcome for public shareholders. We believe the proposal
delivers immediate and certain value for public shareholders at a
significant premium to the unaffected share price and we encourage
public shareholders to support the transaction.”
Mr. Zyskind, Chairman and CEO of AmTrust, said: “I believe that
this transaction represents an exciting step forward for AmTrust,
our employees, and the agents, brokers, partners, and customers we
serve. As a private enterprise, we will be able to focus on
long-term decisions, without the emphasis on short-term
results.”
Mr. Zyskind continued, “The year 2018 marks the 20th anniversary
of AmTrust’s founding. Alongside Stone Point Capital, a strong
partner widely recognized as an experienced investor in the
insurance sector, the Karfunkel-Zyskind family is deeply committed
to the long-term strength and success of AmTrustWe are
well-positioned to continue meeting our policyholders’ needs,
supporting our brokers and agents, and developing our partner
relationships.”
Jim Carey, Senior Principal of Stone Point Capital, said: “Stone
Point is excited to be partnering with the Karfunkel-Zyskind family
and AmTrust’s management team in the next phase of AmTrust’s
growth. AmTrust has built its business through an innovative
spirit and dedication to their employees, customers and
partners. Under Barry Zyskind’s leadership, AmTrust will
continue to invest in long-term growth initiatives and continue to
support their policyholders, agents and brokers.”
Deutsche Bank Securities Inc. is serving as financial advisor to
the Special Committee and BofA Merrill Lynch is serving as
financial advisor to AmTrust.
Willkie Farr & Gallagher LLP is acting as legal advisor to
the Special Committee, Skadden, Arps, Slate, Meagher & Flom LLP
is acting as legal advisor to Stone Point and Paul, Weiss, Rifkind,
Wharton & Garrison LLP is acting as legal advisor to the
Karfunkel-Zyskind Family.
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.
About Stone Point Capital
Stone Point Capital LLC (www.stonepoint.com) is a financial
services-focused private equity firm based in Greenwich, CT. The
firm has raised and managed seven private equity funds – the
Trident Funds – with aggregate committed capital of approximately
$19 billion. Stone Point targets investments in the global
financial services industry, including investments in companies
that provide outsourced services to financial institutions, banks
and depository institutions, asset management firms, insurance and
reinsurance companies, insurance distribution and other
insurance-related businesses, specialty lending and other credit
opportunities, mortgage services companies and employee benefits
and healthcare companies.
Forward Looking Statements
This 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 and delayed the filing of its Form 10-K, the inability to
obtain the requisite shareholder 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, a downgrade in
the financial strength ratings of our insurance subsidiaries, 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 weaknesses in our internal
control over financial reporting and implement effective internal
control over financial reporting and disclosure controls and
procedures in the future, 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, our ability to keep pace with technological
changes, heightened competition, changes in pricing environments,
and changes in asset valuations. 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
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
It
In connection with the proposed transaction, the
Company will file with the SEC a proxy statement on Schedule 14A
and may file other documents with the SEC regarding the proposed
transaction. This press release 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 (when available) 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 at the following:
AmTrust Financial Services Chaya
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.com646.458.3362
Participants in the
Solicitation
The 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, 2016 and
its annual proxy statement filed with the SEC on April 11,
2017. A more complete description will be available in the
proxy statement on Schedule 14A. You may obtain free copies
of these documents as described in the preceding paragraph.
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