AmTrust’s founding family and private equity firm, Stone Point Capital, have jointly proposed taking the US insurer private in a deal valued at $1.37bn.
The deal proposes that the Karfunkel-Zyskind family (comprising AmTrust chairman and CEO Barry Zyskind, George Karfunkel and Leah Karfunkel) and Stone Point acquire all the outstanding 57 percent of AmTrust shares that the Karfunkel-Zyskind family does not already own or control.
The proposed cash purchase price of $12.25 per share values the company at around $2.4bn and represents a 20.8 percent premium over AmTrust’s closing stock price on 8 January.
Both parties said they believe the proposed transaction will provide AmTrust’s common stockholders with immediate liquidity and certainty of value at a significant premium to the current share price, adding that the deal would allow the carrier to focus on the long term without the emphasis on short-term results.
Since the announcement, the board of AmTrust Financial Services has appointed a special committee to consider the proposal. The company said it would not move forward with any transaction unless it is approved by the special committee.
"Any transaction would be subject to a non-waivable condition requiring the approval of a majority of the shares of the company not owned or controlled by the Karfunkel-Zyskind family, senior management or their respective affiliates,” the firm said in a statement. Willkie Farr & Gallagher will serve as the independent legal adviser to the special committee.
If the special committee does not recommend, or the stockholders of AmTrust do not approve, the proposed transaction, the Karfunkel-Zyskind family said it intends to continue as long-term stockholders of AmTrust.
The proposed transaction follows a turbulent year for the carrier, which included a delay in its 2016 results and an announcement that it would have to restate its financials between 2014 and the first nine months of 2016 and reports circulating about an SEC probe.
As a result, the carrier has been punished by investors, with the company’s share price losing almost two thirds of its value in the last year, falling to $10.14 on 8 January 2018 from a 52 week high of $27.93.