The board of Donegal Group Inc. has again recommended its shareholders reject businessman Gregory M. Shepard's attempt to buy their Class B shares.
"DGI's Board unanimously determined that Shepard's Amended Offer remains illusory," the Lancaster County-based insurance holding company said in a statement late Thursday.
Shepard issued a tender offer on March 20 to buy up all of Donegal Group's outstanding Class B stock, which amounts to 962,636 shares, for $30 a share. The nearly $29 million purchase, if consummated, would raise his share of voting stock from 9.99 percent to 22.7 percent, according to his filings.
Last month, Shepard dropped several conditions attached to his initial offer and extended it to May 20. With the changes, "Donegal should have no trouble recommending my offer to the stockholders," Shepard said in a statement.
However, Donegal Group said in a letter to investors posted on its website that Shepard will not be able to obtain the regulatory approvals he needs in time to buy the shares. Nor will he be able to buy his stipulated minimum of 925,000 shares, the letter said, because Donegal Group board members and executives own some of the stock he needs and will not tender it.
"We believe that Mr. Shepard's desires are contrary to DGI's long-term business plan," Donegal Group said.
Shepard wants Donegal Group to be sold or merged with another insurance holding company. Its business strategy is harming its stock price and shortchanging investors, he contends.
For a full look at the battle between Donegal Group and Gregory Shepard, read Tim Stuhldreher's story in today's Central Penn Business Journal.