Privately held Bermuda reinsurer to buy Tower Group for $172 million
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(Reuters) — Tower Group International Ltd. said it would be bought by Bermuda-based ACP Re Ltd., a privately owned reinsurer, for $172 million.
ACP Re offered $3 in cash for each Tower Group share, a premium of 2.4% to the stock's Friday closing. Tower Group's shares were trading at $2.96 before the bell on Monday.
Tower's shares fell about 82% last year as the company repeatedly delayed filing second-quarter results and tripled its expected loss reserves.
The company said in October it was reviewing strategic options and that it would cut about 10% of its workforce.
ACP Re is controlled by a trust established by the founder of AmTrust Financial Services Inc., National General Holdings Corp. and Maiden Holdings Ltd .
Tower Group Chief Executive Michael Lee, who owns 4.2% of the company, has agreed to vote in favor of the merger.
In a separate press release, AmTrust Financial Services Inc. said it would buy renewal rights and assets of the commercial lines insurance operations of Tower for about $125 million.
The transaction is expected to close by the summer of 2014. J.P. Morgan Securities was the lead adviser to Tower, while Guggenheim Securities L.L.C. advised AmTrust.
