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CHICAGO (Crain's)—CNA Surety Corp. has been advised by board members to reject a $375 million purchase proposal from CNA Financial Corp. because the offer is too low.
A special committee formed by CNA Surety's board of directors said Friday that it does not support CNA Financial's offer of $22 for each share the Chicago-based insurer does not already own.
CNA Surety is a Chicago-based franchise of CNA Financial, which owns 62% of CNA Surety. In November, CNA Financial made the offer to buy the remaining shares, saying it wants to simplify its ownership structure and help the franchise grow.
In midday Friday trading, CNA Surety shares were up 57 cents at $24.74 on the New York Stock Exchange.
The special committee said in a news release early Friday that it would consider a revised offer if it provided "full and fair value to the minority shareholders of CNA Surety and reflects the meaningful benefits that would accrue to CNA Financial as a result of full ownership of the company."
Also Friday, CNA Surety announced 2010 earnings of $134.4 million, up 14% from $117.9 million the year before.
Net income for the fourth quarter, which ended Dec. 31, was $54.5 million, or $1.21 per diluted share, 10.5% above the year-earlier period.
Lorene Yue is a reporter for Crain’s Chicago Business, a sister publication of Business Insurance.