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Fremont Insurance acquired by Auto Club Insurance Association
Fremont Michigan InsuraCorp Inc. announced April 18 that it has entered into a merger agreement with the Auto Club Insurance Association of Dearborn. ACIA is to acquire all outstanding shares of Fremont for $36.15 per share in cash, for an aggregate purchase price of approximately $67.7 million.
On Friday, April 15, Fremont stock closed at $26.75. Today, it leads the list of stocks of local interest covered on the Business Journal’s Area Economy page, with a price that reached $34.97 last week.
Biglari Holdings, formerly known as Steak N Shake, initiated a hostile takeover attempt of Fremont in December 2009, with an offer of $24.50 a share, almost $2.50 above its closing price that same day. The offer was rebuffed by the management of Fremont.
Sardar Biglari, chairman and CEO of Biglari Holdings, which owns about 9.7 percent of Fremont stock, upped his ante in October with a new offer to buy Fremont out at a price 41 percent higher than the closing price that day, and some stockholders began pressuring the Fremont board to consider the offer.
The joint announcement last week from Fremont and ACIA included a comment from Biglari.
“I have enjoyed working with Fremont's Chairman of the Special Committee in our effort to realize the full value of Fremont's shares. The merger with ACIA represents a victory for all Fremont stockholders. We applaud the Committee's efforts,” said Biglari.
Certain other stockholders representing approximately 16 percent of Fremont's stock, including Mitchell Partners LP, holder of approximately 9.9 percent, have signed a shareholders’ agreement committing to vote their shares in favor of the transaction, according to the Fremont announcement.
Richard E. Dunning, president and CEO of Fremont, said that the deal “delivers significant value to our shareholders. Additionally, I see this as a positive transaction for our agents, employees and the Fremont community as ACIA plans to maintain Fremont's franchise and our Fremont, Mich., executive offices, and work with Fremont to increase its independent agency distribution in the state of Michigan and surrounding states.”
ACIA is an affiliate of AAA Auto Club Group, which has more than 4 million members in eight Midwest states.
Fremont MI InsuraCorp is the holding company for Fremont Insurance Co., based in Fremont. The company, which has roots going back more than 130 years, went public in 2004.