Gregory Shepard Proposes Amicable Transaction to Donegal Group Inc.
BLOOMINGTON, Ill., Oct. 7, 2013
BLOOMINGTON, Ill., Oct. 7, 2013 /PRNewswire/ -- (NASDAQ: "DGICA" and "DGICB")
– Gregory Mark Shepard announced today that he has sent a letter to the Boards
of Directors of Donegal Group Inc. ("Donegal Group") and Donegal Mutual
Insurance Company ("Donegal Mutual") proposing an amicable transaction.
Mr. Shepard has disclosed this proposal in an amendment to his Schedule 13D,
which was filed today and is available at www.sec.gov.
In the amicable transaction proposed in his letter, Mr. Shepard would offer to
purchase the 957,136 shares of Class B Common Stock of Donegal Group ("Class B
Shares") that are not already owned by him or Donegal Mutual at a negotiated
price within a range of $33 - $37 per share, and a mutual property and
casualty insurance company would purchase the 9,021,350 shares of Class A
Common Stock of Donegal Group ("Class A Shares") that are not already owned by
him or Donegal Mutual. Mr. Shepard knows of two U.S.-based mutual property
and casualty insurers, both of which are much larger than Donegal Group and
Donegal Mutual and rated A or higher by A.M. Best, who would be interested in
such a transaction.
Alternatively, if Donegal Group and Donegal Mutual elect to enter into a
global transaction with an acquiring mutual property and casualty insurance
company, Mr. Shepard would agree to accept whatever price per share of Class A
Shares that are not already owned by him or Donegal Mutual that Donegal Group
negotiates with the acquirer as the price per share for both his Class A
Shares and Class B Shares.
If the Boards of Directors of Donegal Group and Donegal Mutual accept the
amicable transaction proposed in his letter, Mr. Shepard would suspend his
plans to acquire up to 962,636 additional Class B Shares in the open market
and privately negotiated transactions.
On Friday, October 4, 2013, the last full trading day before Mr. Shepard
publicly announced his proposal, the closing prices for Class A Shares and
Class B Shares were $14.30 and $18.56, respectively.
Mr. Shepard further notes that Donegal Group's Investor Presentation titled
"Pursuing Effective Business Strategy in Regional Insurance Markets" to
"Achieve Book Value Growth By Implementing Plan" dated September 20, 2013 and
filed with the SEC, makes no mention of the substantial dilution of Donegal
Group's shareholders as a result of the extraordinarily high number of options
granted to Donegal Group insiders and employees relative to industry peers.
Mr. Shepard notes that during the five years between 2007 and 2012, stock
option issuance grew by an astounding 181% or 36.2% on average per year, which
reduced the increase in average fully diluted book value to a very
disappointing 1.6% per year. This Investor Presentation was filed as Exhibit
99.1 to Donegal Group's Form 8-K on September 20, 2013, and is available at
SOURCE Gregory Mark Shepard
Contact: D.F. King & Co., (212) 269-5550
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