By Lisa Kerner
Charlotte, N.C., May 17 - Great American Financial Resources, Inc. entered into a definitive merger agreement to acquire all its shares not owned by its affiliate American Financial Group, Inc. for $24.50 per share in cash. The transaction, valued at $225 million, will be funded by Great American using excess capital plus borrowings from American Financial.
American Financial beneficially owns about 81% of the outstanding shares of Great American, according to a company news release.
Great American's board and special committee approved the deal, which is expected to close in the third quarter of 2007.
As part of the merger, litigation involving certain Great American shareholders and challenging the original merger terms has been settled.
American Financial believes the transaction will be accretive to earnings per share and will enhance its return on equity.
"We are pleased to have agreed to merger terms acceptable to both American Financial Group and Great American Financial Resources," American Financial co-chief executive officers Craig Lindner and Carl Lindner III said in the release.
"The transaction will allow American Financial Group to use excess capital to increase its ownership of a specialty-focused business and simplify the American Financial organization. It will also result in immediate expense savings through the elimination of a public company and allows for other synergies that will provide efficiencies over time."
American Financial specializes in property and casualty insurance through the operations of the Great American Insurance Group based in Cincinnati.
| Acquirer: | American Financial Group
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| Target: | Great American Financial Resources, Inc.
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| Transaction value: | $225 million
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| Price per share: | $24.50
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| Announcement date: | May 17
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| Expected closing: | Third quarter of 2007
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| Stock price for acquirer: | Nasdaq: AFG: $36.04 on May 16
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| Stock price for target: | Nasdaq: GFR: $24.83 on May 16
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