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American Financial Group Ups Offer for National Interstate.


7 July 2016 - US-based insurance holding company American Financial Group, Inc. (NYSE: AFG) has increased its offer to acquire all of the outstanding common shares of National Interstate Corp. (NASDAQ: NATL) that are not currently owned by AFG's Great American Insurance Co. subsidiary, from USD 30.00 per share in cash to USD 32 per share in cash, the company said.

The proposed transaction will not be subject to a financing condition.

The USD 32.00 per share price represents a 41.5% premium over National Interstate's unaffected share closing price on 4 March, the last trading day prior to public announcement of our proposal, and a 6.5% premium over yesterday's closing price.

The USD 32.00 per share price is a 1.8x multiple of National Interstate's book value per share excluding unrealized gains on fixed maturities as of 31 March 2016, and a 27.6x multiple of National Interstate's 2015 diluted net income from operations per share.

The company has raised its offer price USD 2.00 per share since its initial proposal, which represents aggregate additional consideration of approximately USD 20m that will be paid to National Interstate shareholders other than GAIC.

GAIC's original USD 30.00 per share offer translated into an aggregate purchase price of approximately USD 293m. The revised deal would be worth USD 313m.

The company currently owns approximately 51% of the outstanding National Interstate common shares, and current or former executive officers of GAIC or AFG currently comprise five of the 11 members of the board of directors of National Interstate.

AFG expects that the National Interstate board of directors will appoint a new special committee to consider the proposed transaction and make a recommendation to the National Interstate board of directors.

The company also expects that the special committee will retain its own independent legal and financial advisors to assist in its review of the proposed transaction.

AFG said it will not move forward with the transaction unless it is approved by such special committee.

None of the National Interstate directors who are current or former executive officers of GAIC or AFG will participate in the consideration of the AFG proposal by National Interstate, the special committee or the special committee's advisors.

In addition, the transaction will be subject to a non-waivable condition requiring approval of a majority of the shares of National Interstate not owned by AFG or its affiliates.

The proposed transaction will not be subject to a financing condition.

AFG believes that National Interstate operations represent an important strategic component of AFG's overall operations.

American Financial Group is an insurance holding company, based in Cincinnati, Ohio with assets of approximately USD 50bn.

Through the operations of Great American Insurance Group, AFG is engaged primarily in property and casualty insurance, focusing on specialised commercial products for businesses, and in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets.

Great American Insurance Group's roots go back to 1872 with the founding of its flagship company, Great American Insurance Co.

Skadden, Arps, Slate, Meagher and Flom LLP is acting as legal advisor to AFG and GAIC in the proposed transaction.

Country: USA

Sector: Insurance

Target: National Interstate Corp

Buyer: American Financial Group, Inc


Deal size in USD: 313m

Type: Corporate Acquisition

Financing: Cash

Status: Bidding

Buyer advisor: Skadden, Arps, Slate, Meagher and Flom LLP , ,

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Publication:M & A Navigator
Date:Jul 7, 2016
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