CNA & CNA Surety Sign Definitive Agreement for CNA to Acquire Public Minority Stake in CNA Surety for $26.55 Per Share
CHICAGO, April 21, 2011 – CNA Financial Corporation (NYSE:CNA) and CNA Surety Corporation (NYSE:SUR) announced today that they have signed a definitive merger agreement pursuant to which CNA will commence a tender offer to acquire all of the outstanding shares of common stock of CNA Surety not currently owned by subsidiaries of CNA for $26.55 per share in cash.
The transaction has been approved by the board of directors of CNA Surety, following the recommendation and approval of a Special Committee consisting of CNA Surety’s three independent directors. The tender offer will be conditioned upon, among other things, acceptance by the holders of a majority of the publicly held shares of CNA Surety. Subject to the satisfaction of the foregoing, it is currently anticipated that the transaction will be completed by the end of the second quarter.
The $26.55 per share price represents a 38% premium to the closing price of CNA Surety’s common stock on October 29, 2010, the last trading day prior to CNA's public announcement of its proposal to acquire the public minority stake in CNA Surety, and a 21% premium to CNA's original proposed price of $22 per share. The per share price also represents a 1.3x multiple of CNA Surety’s tangible book value per share excluding net unrealized gains as of December 31, 2010.
"We are delighted to have reached this agreement, which offers compelling benefits for all parties,” said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation. “This transaction will allow CNA Surety’s minority stockholders to monetize their investment at a substantial premium to their historical stock price. It affords us the opportunity to invest in a business that we know well and further expand our Specialty franchise, while continuing to simplify our operation. As a wholly-owned subsidiary of CNA, we believe CNA Surety will be even better positioned to compete with the large, diversified commercial lines companies it faces in the surety market."
"When complete, this transaction will provide us the benefits of being an integrated part of a larger, diversified commercial lines insurance company and we are pleased that CNA has placed this vote of confidence in CNA Surety," said John Welch, President and Chief Executive Officer of CNA Surety. "We will continue to provide the same service levels and capacity that our clients expect from us."
Philip Britt, chairman of the Special Committee, said, "The Special Committee is very pleased to have completed a thorough process that has resulted in a transaction with CNA that we believe provides compelling value to the minority stockholders of CNA Surety."
J.P. Morgan Securities LLC is acting as financial advisor and Simpson Thacher & Bartlett LLP is acting as legal advisor to CNA in connection with the transaction.
Goldman, Sachs & Co. is acting as financial advisor and Latham & Watkins LLP is acting as legal advisor to the Special Committee of the board of CNA Surety in connection with the transaction.
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Any forward-looking statements made in this press release are made by CNA and CNA Surety as of the date of this press release. Further, CNA and CNA Surety do not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA’s or CNA Surety’s expectations or any related events, conditions or circumstances change.
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