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Activist shareholder Gregory Shepard submits another Donegal stock offer

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Gregory Shepard is at it again.

According to a Securities and Exchange Commission filing released Monday, the malcontent minority shareholder of Lancaster County-based Donegal Group Inc. has made it known that he once again is trying to acquire enough stock in the company to more than double his shareholder voting power.

The market-price purchase Shepard proposes would up his voting power from 9.9 percent to 22.7 percent, according to the filing. It’s the same amount of voting power Shepard, from Bradenton, Fla., proposed in a March offer to buy the portion of the company’s Class B stock.

In the latest filing, he said he wants to buy the shares because he believes the company’s shares are undervalued. The purchase would not institute a change in ownership or control, because Donegal Mutual has 65.5 percent of the combined voting power, according to the filing.

In previous offers, Shepard tried to buy the stock at higher valuations, but this time around, he wants to buy the stock at market price. He did add he also could buy the stock through private negotiations.

Donegal Group’s board of directors has rebuffed Shepard’s previous offers, but has not ruled on a November proposal in which Shepard wants the Donegal Group to undertake a recapitalization plan.

The plan would allow equal voting power to owners of both Class A and Class B company stock. Currently, Class A common stock is worth one vote per share, while Class B stock is worth one-tenth of a vote, the filing states. Shepard has asked the company’s board of directors to consider the proposal at its 2014 annual shareholders meeting.

In rejecting Shepard’s prior offers, the board of directors stated one of its reasons was that the purchase didn’t have the necessary federal approvals.

However, in Monday’s filing, Shepard said the Federal Reserve Board in October “has determined not to disapprove the notice” of a possible stock sale.

The notice also said the Pennsylvania Department of Banking and Securities “does not object to Shepard’s proposal.”

Shepard’s filing claims that he is not currently seeking control of Donegal Group and that he would have no plans to liquidate it, sell its assets, merge it or consolidate it.

However, in his October SEC filing, he said he had another mutual property and casualty insurance company lined up to negotiate a price to buy more Donegal stock.

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