공시 • May 07
ProAssurance Corporation (NYSE:PRA) completed the acquisition of 98% stake in NORCAL Mutual Insurance Company for approximately $520 million.
ProAssurance Corporation (NYSE:PRA) entered into a definitive agreement to acquire NORCAL Mutual Insurance Company for $600 million on February 20, 2020. The transaction will be followed by the demutualization of NORCAL Mutual Insurance Company. Policyholder will be given choice of consideration (immediate cash at 50% of third-party appraisal value, stock in the new entity, 10 year contribution certificate at 100% of appraisal value). Under the terms of the agreement, NORCAL Mutual's demutualization will be followed by a tender offer from ProAssurance to purchase the stock of the demutualized company. ProAssurance will pay a base consideration of $450 million in cash, with a contingent consideration of up to $150 million. Base consideration of $450 million will be funded by $200 million in debt and $250 million of access capital. NORCAL Group will nominate two individuals to new seats on the ProAssurance board. As of April 19, 2021, ProAssurance Corporation amended and restated its revolving line of credit facility to allow for additional indebtedness of a subsidiary related to our planned acquisition of the NORCAL Group so long as the Contribution Certificates do not exceed $350 million.
The transaction is subject to customary closing conditions, including required regulatory and California Department of Insurance approvals, a maximum threshold for one of the alternative forms of consideration in the demutualization, a minimum threshold for the number of NORCAL shares tendered to ProAssurance and NORCAL Mutual policyholder approvals. The Boards of Directors for both companies have unanimously approved the transaction. There is no financing condition to consummate the transaction. Shareholder approval is not required for ProAssurance. As of May 6, 2020, Federal Trade Commission granted early termination notice. NORCAL’s policyholders approved the transaction on April 26, 2021. The transaction is expected to close by the end of 2020. The transaction is expected to close in early 2021. The transaction is expected to close in the second quarter of 2021. The transaction will be accretive to earnings in 2022 and substantially accretive to EPS in 2023 and beyond. The transaction is expected to deliver $18 million in pre-tax synergies.
Goldman Sachs & Co. LLC acted as financial advisor to ProAssurance. Burr & Forman LLP and Sidley Austin LLP acted as legal advisor to ProAssurance. Waller Helms Advisors acted as financial advisor; and Mayer Brown LLP and John Tamisiea, Heidi Steele, Jeffrey Holdvogt, Jeffrey Brennan, John Lutz, Bradford LaBonte, and Daniel Doron of McDermott Will & Emery LLP acted as legal advisor to NORCAL Mutual. Piper Sandler & Co. provided a fairness opinion to the Board of Directors of NORCAL Mutual. Chad Hull, Tony Latini, James Adducci, Jim McCormick, Kevin Ryan, Bishara Zinaty, Josh Katz, Tom Haldeman, Charlie Crowley, Chris Chapman, Raffi Pounardjian, David Bonavita, Kain Melville from Boenning & Scattergood, Inc., Investment Bank acted as financial advisor to NORCAL Mutual Insurance Company. Paul Schnell and Todd Freed of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Goldman Sachs & Co., LLC. Morgan, Lewis & Bockius LLP acted as legal advisor to the Board of Directors of NORCAL Mutual Insurance Company. Computershare acted as transfer agent to ProAssurance.
ProAssurance Corporation (NYSE:PRA) completed the acquisition of 98% stake in NORCAL Mutual Insurance Company for approximately $520 million on May 5, 2021. The base consideration at closing is $441 million, with additional consideration of up to $83 million available contingent upon NORCAL's ultimate net loss development between December 31, 2020 and December 31, 2023. Base consideration and maximum contingent consideration are subject to non-material change as the equity allocation is reviewed and finalized post close. NORCAL’s employees will join ProAssurance team. ProAssurance is funding the transaction with $248 million of cash on hand, and NORCAL will pay $2 million to policyholders who elected to receive the discounted cash option for their allocated share of the converted equity. The remainder of the base consideration, approximately $191 million, is in the form of contribution certificates issued to certain NORCAL policyholders in the conversion of NORCAL Mutual, and those instruments are an obligation of NORCAL Insurance Company.