AmTrust Financial Services Inc. has agreed to a go-private transaction after a group of investors raised its buyout offer to $13.50 per share from $12.25 per share.
Evergreen Parent LP, an entity formed by private equity funds managed by Stone Point Capital LLC, together with CEO Barry Zyskind, George Karfunkel and Leah Karfunkel, will acquire the approximately 45% of AmTrust's issued and outstanding common shares that the Karfunkel-Zyskind family and certain of its affiliates and related parties do not currently own or control. The transaction values AmTrust's fully diluted equity at nearly $2.7 billion, excluding the company's outstanding preferred stock.
Stone Point, Zyskind, and the Karfunkels in January offered to take AmTrust private for $12.25 per share. After that bid was submitted, AmTrust's board formed a special committee to consider the proposal and financial advisers were retained to assist in the process.
Under the terms of the deal, AmTrust shareholders not affiliated with the Karfunkel-Zyskind family will receive $13.50 in cash for each common share they hold. The price represents a premium of 33% to AmTrust's Jan. 9 unaffected closing common stock price. The Karfunkel-Zyskind family, and certain of its affiliates and related parties, will rollover their shares in AmTrust for interests in Evergreen Parent.
The deal is subject to closing conditions, including approval by regulators and the company's shareholders, and is expected to close in the second half of the year.
Deutsche Bank Securities Inc. is serving as financial adviser to the special committee and Bank of America Merrill Lynch is serving as financial adviser to AmTrust. Willkie Farr & Gallagher LLP is acting as legal adviser to the special committee, Skadden Arps Slate Meagher & Flom LLP is acting as legal adviser to Stone Point and Paul Weiss Rifkind Wharton & Garrison LLP is acting as legal adviser to the Karfunkel-Zyskind family.
AmTrust separately announced that it filed a Form 12b-25 with the SEC, providing it an automatic 15-day extension to file its Form 10-K for the year ended Dec. 31, 2017. The company plans to file its Form 10-K no later than March 16. AmTrust's management continues to evaluate the previously disclosed material weaknesses in its internal controls, the company said.
Further, AmTrust disclosed in a filing that it will be on the hook to pay Evergreen a termination fee of $33 million if the deal falls through under certain conditions. Evergreen will be entitled to receive reimbursement of out-of-pocket fees and expenses incurred in connection with the proposed transaction of not more than $5 million if the deal is terminated because the required stockholder approval is not obtained.
Also, if Evergreen terminates the merger due to AmTrust's failure to file its annual report on Form 10-K for the year ended Dec. 31, 2017, on or prior to June 30, Evergreen owner Trident VII LP will be entitled to receive reimbursement of out-of-pocket fees and expenses incurred in connection with the proposed transaction in an amount not to exceed $5 million.
