Financial services and insurance group, Markel Corporation has announced that it will acquire fronting and program service insurance specialist, State National Companies, Inc. for approximately $919 million.
Under the definitive agreement, which has been unanimously approved by both Markel and State National Boards’, Markel will purchase all of the outstanding shares of State National common stock for $21 per share in cash, representing a total transaction value of around $919 million.
Markel’s Co-Chief Executive officer (CEO), Richard R. Whitt, said; “We are excited to be joining forces with State National – an industry leader with a talented management team that has delivered exceptional long-term results. In addition, we are impressed by the cultural fit between our two organizations. Strategically, State National will help us to leverage our Insurtech and digital distribution initiatives, diversify our underwriting and fee based portfolios and revenue streams, and add to Markel’s third party capital capabilities.
“Combining Markel’s financial strength with State National ’s unique business model and proven record of success, we are confident that all stakeholders will be well served moving forward.”
Once the transaction is completed, which is expected in the fourth-quarter of 2017, State National will operate as a separate business. Terry Ledbetter, the Chairman and CEO, will continue to lead the management team of State National, which remain in place in Bedford, Texas, U.S.
Ledbetter, commented; “After careful and thorough analysis of a range of opportunities, our board of directors determined this transaction with Markel to be in the best interest of State National and our shareholders. We believe the transaction appropriately recognizes the value of State National’s business model, recent growth and future market opportunities as a leading specialty provider of property and casualty insurance services operating in two niche markets throughout the United States, and provides our shareholders with an immediate and attractive cash premium for their investment in State National.
“We believe this transaction with Markel is good for our employees and clients, as well as our shareholders. Markel recognizes our shared commitment to offering unique, high-quality solutions that simplify the complexities of insurance for clients nationwide. We have long respected Markel and are proud to partner with this distinguished company that has a strong reputation and proven track record of success in acquiring and partnering with insurance companies. Markel understands the uniqueness of our business model, and will be a tremendous asset as we, together, build upon our leadership position and specialty insurance service offerings, and continue to implement our strategic plan to deliver enhanced value for our clients.
“This transaction is all about growth, not cost-cutting, and we believe that State National employees will benefit from being part of a larger, stronger, growth-oriented company with a more diversified platform. Our success is driven by the ongoing efforts of our talented employees and I thank them for their continued hard work and dedication. We look forward to working with Markel to quickly complete the transaction and are committed to ensuring a smooth transition.”
The deal remains subject to the approval of a majority of State National shareholders, and requires approval by necessary state insurance industry regulators, and some other customary closing needs. Markel has said that it plans to finance the deal with cash balances on hand.
The transaction announcement reveals that members of the Ledbetter family have entered into a voting arrangement with Markel that supports the merger, as have CF SNC Investors LP. The voting agreements mean that roughly 37% of State National’s common stock is now committed to vote in favour of the deal.
