Prepared Holdings, the holding company for Prepared Insurance Company, announced that it has entered into a definitive merger agreement with Meridian Insurance Holdings, a private investment group, under which Prepared will be acquired by Meridian.
It is anticipated that Meridian will pay a total all-cash purchase price of approximately $35.7 million, assuming a GAAP book value of Prepared of approximately $20.58 million at closing. The purchase price will be reduced if the book value is less, with a minimum purchase price of $34.47 million if book value is $19.45 million at closing.
If the book value drops below such amount, either party may terminate the transaction. The purchase price includes the repayment of approximately $3.7 million of Prepared debt at closing. The purchase price will be funded through credit facilities and private equity investments in Meridian.
The Board of Managers/Directors of both companies have approved the transaction. The transaction is expected to close around October 30th, subject to the satisfaction of customary closing conditions.
The transaction is subject to the approval of Prepared’s membership and the Florida Office of Insurance Regulation, and other customary closing conditions. In connection with obtaining member approval of the proposed merger, Prepared will mail a consent solicitation statement to its members.
Meridian has received support agreements from the holders of approximately 40% of the outstanding membership units of Prepared under which such holders have agreed to vote in favor of the transaction.
The merger agreement and support agreements may be terminated in the event Prepared receives a superior proposal for an acquisition transaction from a third party prior to October 15, 2015, that Meridian refuses to match, provided that Prepared pays Meridian a termination fee of $1.27 million plus Meridian’s out-of-pocket expenses incurred in connection with the transaction.
Prepared Holdings is the parent company in a consolidated group of companies writing personal homeowners’ lines of business.