Tower Group International Ltd., the insurer that agreed to be bought by ACP Re Ltd., plunged to a record low amid doubts over whether the deal will be completed.
Tower declined 19 percent to $1.65 at 9:52 a.m. in New York. The stock has lost half its market value this year, after plunging 78 percent in 2013 on higher-than-expected claims costs.
“TWGP shares will likely be rife with speculation regarding the outcome of its merger with ACP Re,” Ken Billingsley, an analyst at Compass Point Research & Trading LLC, said in a research note today using Tower’s ticker symbol.
The insurer disclosed late on June 27 a request that ACP Re affirm by 5 p.m. New York time today its commitment to buy Tower for $2.50 a share, as the company faces increased supervision from a Massachusetts regulator. Tower on May 22 said it hired Greenhill & Co., under pressure from the state watchdog, to provide advice on repaying debt if the takeover collapses.
ACP responded June 27 that it “reserves all its rights under the Merger Agreement, with respect to the matters referenced in your letter or otherwise,” according to a copy of the letter in Tower’s filing.
ACP Re is owned by a trust established by AmTrust Financial Services Inc.’s founder, according to a statement in January when the deal was announced. That agreement called for buying Tower for $3 a share, a price that was later lowered to $2.50.