Activist shareholder Gregory M. Shepard has modified and extended his offer to buy close to 1 million shares of Donegal Group Inc. Class B stock.
Shepard is dropping his stipulation that he be allowed to designate three Donegal Group and Donegal Mutual Insurance Co. board members, as well as his condition that Donegal Group cease granting new Class A stock options.
Donegal should now “have no problem recommending my offer to the Class B shareholders,” Shepard said in a statement. The offer is extended to May 20.
Shepard issued his offer on March 20 to buy 962,636 shares of Donegal Group’s class B stock, virtually all the outstanding shares, for $30 per share, or about $29 million. The offer was initially good through last Friday; as of then, 362,745 shares had been offered for purchase, and 8,872 more submitted by guaranteed delivery, he said.
The stockholders who tendered shares do not need to resubmit them, he said. At least 925,000 shares must be proffered for the deal to take effect.
Donegal recommended against accepting Shepard’s offer on April 3.
Donegal’s Class B shares traded at $22.97 per share on Monday afternoon, according to Yahoo Finance.
Shepard has argued that Donegal stock is undervalued and that the company should merge with another insurer. Donegal has argued its business strategy is satisfactory.
On Wednesday, Donegal Group reported first-quarter earnings of 25 cents per diluted share. At its annual meeting Thursday, shareholders approved raising the number of Class A shares the company may issue from 30 million to 40 million.
Shepard owns 3.6 million Class A and 397,100 Class B shares, making him the largest shareholder after Donegal Mutual. His tender offer would raise his voting share to 22 percent, according his filings with the U.S. Securities and Exchange Commission.