The board of insurance holding company Donegal Group Inc. today recommended its shareholders reject the tender offer of activist shareholder Gregory M. Shepard.
“DGI’s board of directors unanimously determined that his offer is illusory,” the Lancaster County company said in a statement, “because Shepard will not be able to attain the conditions to the offer before its expiration date or within a reasonable period of time after the expiration date.”
The statement did not elaborate.
The price represents a premium of more than 42 percent over the shares’ closing price the day before the offer was made. The offer expires April 19.
The deal would increase Shepard’s share of Donegal Group voting stock to more than 22 percent, and would absorb nearly all the Class B stock available to the public, according to Shepard’s filings with the U.S. Securities and Exchange Commission.
Shepard is pushing for Donegal Group to be sold or merged with another insurance holding company, arguing its current setup and strategy are shortchanging investors.
Donegal’s Class B shares were at $22.37 in after-hours trading this afternoon, according to Yahoo Finance.