Eastern Insurance board agrees to $200M sale to ProAssurance
An Alabama company has acquired a locally headquartered insurance company for more than $200 million, according to officials from both companies.
Eastern Insurance Holdings Inc. of Lancaster has been bought by ProAssurance in an all-cash transaction that values Eastern at $24.50 per share. The sale has an aggregate value of about $205 million, according to a news release announcing the sale. It is expected to close by Jan. 1.
The two companies had been discussing some form of a business arrangement for about a year, but talks got serious in May, with ProAssurance making an official offer in July, according to Eastern officials.
"We've been an acquisition target since we went public in 2006," Michael Boguski, Eastern's president and CEO, said Tuesday afternoon. "So it wasn't a surprise to us."
All of Eastern's 235 employees — 152 of which are in Lancaster — will be retained after the sale, according to Donna Nardy, marketing manager at the company.
In fact, almost nothing about the company will change, Boguski said. Under the terms of the sale agreement, ProAssurance will maintain Eastern's corporate office in Lancaster and its regional and satellite offices. Eastern Insurance will keep its name as well.
The six members of Eastern's senior executive staff have signed long-term contracts with ProAssurance to stay at the company, Boguski said.
"I've been recruiting the senior-level staff since we started in 1997 and we've all been together through this build-out of the business plan and we wanted the same team running the company moving forward," Boguski said Tuesday afternoon.
Eastern will become a wholly owned subsidiary of ProAssurance, a specialty insurance company based in Birmingham, Ala., that focuses on medical professional liability and legal profession liability. Eastern Insurance specializes in workers' compensation products and has offices in Pennsylvania and five other states.
Eastern's board of directors unanimously approved the sale and recommended Eastern's shareholders vote in favor as well, according to the release. Shareholders of ProAssurance do not have to approve the deal.
"ProAssurance and Eastern have well established business models that produce excellent results over changing insurance cycles and economic conditions," Boguski said. "We share similar employee cultures built on integrity, innovation and carefully cultivated customer and employee loyalty. We look forward to continuing to execute our strategic plan under the Eastern brand with the support, expertise and financial strength of our new partners at ProAssurance."
Eastern said it will pay its previously announced quarterly stock dividend of 11 cents per share. The company will be permitted to pay an additional 11 cents per share if the ProAssurance deal has not received necessary regulatory approval for the purchase by Dec. 31.
ProAssurance stock had slipped more than 4 percent from $47.30 Friday morning to $45.35 at 9:50 a.m. Tuesday. But it rallied after the sale announcement to $46.05 just after 11 a.m.
Eastern stock, however, jumped 15 percent Tuesday morning as news of the sale spread. It closed at $21.30 per share Monday but was at $24.38 by about 10:15 a.m. Tuesday.