The National Security Group, Inc. (NASDAQ:NSEC) and VR Insurance
Holdings, Inc. (“VR Holdings”) today announced that they have
entered into a definitive merger agreement, under which VR Holdings
has agreed to acquire all of the outstanding common shares of The
National Security Group, Inc. (“NSG” or the “Company”) for $16.35
per share in cash, representing a 77% premium to the closing share
price as of January, 25, 2022. Total transaction value is
approximately $41.4 million, subject to certain provisions[1]. VR
Holdings is a newly formed Delaware company founded by Vivek
Ranadivé. Mr. Ranadivé has been the Founder and Managing Director
of Bow Capital Management LLC and its affiliated funds since 2016
and Chairman, Chief Executive Officer and Governor of the
Sacramento Kings since 2013.
“We believe this transaction is in the best interest of NSG’s
shareholders and policyholders,” said William L. Brunson, Jr.,
Chief Executive Officer of NSG. He said, “By combining our 75-year
history of stability, underwriting expertise and commitment to our
policyholders with the financial resources of the investor group
led by Mr. Ranadivé, we expect to realize greater opportunities for
growth and an enhanced ability to serve our policyholders and agent
partners.” Mr. Brunson also noted that shareholders will benefit
from the significant premium to recent share prices.
The Company’s Board of Directors has unanimously approved the
transaction and recommended that NSG’s shareholders vote in favor
of the transaction. The agreement requires approval by holders of
the majority of NSG’s outstanding common shares. The acquisition is
expected to close by the end of the second quarter of 2022, subject
to customary closing conditions, including receipt of certain
required regulatory approvals and approval of NSG’s shareholders.
There are no financing conditions associated with the definitive
merger agreement.
Following closing, it is anticipated that VR Holdings will
continue to leverage the existing operations and infrastructure of
NSG’s wholly owned property and casualty and life insurance
subsidiaries. The Company’s current Chief Financial Officer, Brian
McLeod, will serve as Chief Operating Officer of the Company’s
insurance subsidiaries and will also serve as VR Holdings’ Chief
Financial Officer. NSG remains fully committed to its policyholders
and its independent agent partners and expects no immediate changes
in its day-to-day business operations. Upon completion of the
transaction, NSG will become a private company with the flexibility
and capital to accelerate its next stage of growth. Mr. McLeod will
work closely with the management team including Ross Aron, CEO of
VR Holdings, and the investor group to continue the Company’s
expansion.
[1] The price per share is subject to downward adjustment if the
combined statutory capital and surplus of NSG’s insurance
subsidiaries is less than $43 million; VR Holdings can terminate
the agreement if combined statutory capital and surplus falls below
$38.7 million. The insurance subsidiaries are expected to exceed
the $43 million threshold in their statutory financial statements
as of December 31, 2021.
Transaction Advisors
Piper Sandler & Co. is acting as financial advisor to NSG,
and Burr & Forman, LLP is serving as the Company’s legal
advisor. For Mr. Ranadivé and VR Holdings, Morris, Manning &
Martin, LLP served as legal advisor, while DHG serves as accounting
advisors and Balch & Bingham serves as Alabama regulatory
counsel.
About The National Security Group, Inc.
The National Security Group, Inc. (NASDAQ:NSEC), through its
property & casualty and life insurance subsidiaries, is a
specialty underwriter of property, casualty, life, accident and
health insurance in ten states. The Company writes primarily
personal lines property coverage including dwelling fire and
windstorm, homeowners, and mobile homeowners’ products. The Company
also offers life, accident and health, supplemental hospital and
cancer insurance products. The Company was founded in 1947 and is
based in Elba, Alabama. Additional information about the Company,
including additional details of recent financial results, can be
found on our website: www.nationalsecuritygroup.com.
About Vivek Ranadivé
Mr. Ranadivé has been the Founder and Managing Director of Bow
Capital Management LLC and its affiliated funds since 2016 and
Chairman, Chief Executive Officer and Governor of the Sacramento
Kings since 2013. He founded his first company, Teknekron Software
Systems, Inc. (“Teknekron”), in 1986 to develop and apply software
to financial trading floors. After selling Teknekron to Reuters PLC
in 1994, he then went on to found and spin-out TIBCO as a separate
company in 1997. TIBCO completed its initial public offering in
1999 and was subsequently sold to Vista Equity Partners in 2014 for
$4.3 billion. As Chairman and Chief Executive Officer, Mr. Ranadivé
built TIBCO into a leading provider of middleware software that
became the central data nervous system for many of the world’s
largest companies and government agencies. Mr. Ranadivé became
involved in NBA basketball first as Vice Chairman of the Golden
State Warriors. Mr. Ranadivé holds a B.S. and M.A. degree in
Electrical Engineering from the Massachusetts Institute of
Technology and an MBA from Harvard Business School where he
graduated as a Baker Scholar.
About VR Holdings, Inc.
VR Holdings is a newly formed Delaware company founded by Vivek
Ranadivé and a group of family office and strategic investors. VR
Holdings has been formed to serve as the holding company for NSG
and potentially other insurance and financial services
businesses.
Additional Information and Where to Find It
In connection with the proposed transaction, The National
Security Group, Inc. will file with the Securities and Exchange
Commission (“SEC”) a proxy statement on Schedule 14A and may file
or furnish other documents with the SEC regarding the proposed
transaction. This material is not a substitute for the proxy
statement or any other document which NSG may file with the SEC.
INVESTORS IN AND SHAREHOLDERS OF NSG ARE URGED TO READ THE PROXY
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR
FURNISHED OR WILL BE FILED OR WILL BE FURNISHED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY (IF AND WHEN THEY BECOME AVAILABLE) BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
shareholders may obtain a free copy of these documents (when they
are filed and become available) free of charge at the SEC’s website
at www.sec.gov. NSG also will provide a copy of these materials
without charge on its website at www.nationalsecuritygroup.com.
Participants in the Solicitation
The National Security Group, Inc. and its executive officers and
directors may be deemed to be participants in the solicitation of
proxies from the shareholders of NSG in connection with the
proposed transaction. Information about NSG's directors and
executive officers is available in NSG's definitive proxy
statement, dated April 7, 2021, for its 2021 annual meeting of
shareholders. Other information regarding the participants and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the proxy statement
that NSG will file with the SEC, when it becomes available.
Cautionary Statement Regarding Forward-Looking
Statements
Any statement contained in this report which is not a historical
fact, or which might otherwise be considered an opinion or
projection concerning the Company or its business, whether
expressed or implied, is meant as and should be considered a
forward-looking statement as that term is defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are based on assumptions and opinions concerning a
variety of known and unknown risks, including but not limited to
changes in market conditions, natural disasters and other
catastrophic events, increased competition, changes in availability
and cost of reinsurance, changes in governmental regulations,
technological changes, political and legal contingencies and
general economic conditions, as well as other risks and
uncertainties more completely described in the Company’s filings
with the Securities and Exchange Commission. These statements may
also include assumptions about VR Holdings’s proposed acquisition
of NSG (including its benefits, results, effects and timing). Some
of these forward‐looking statements are identified with words like
"believe," "may," "will," "should," "expect," "intend," "plan,"
"project," "predict," "anticipate," "estimate" or "continue" and
other words and terms of similar meaning. All forward‐looking
statements involve risks and uncertainties which could affect NSG’s
and VR Holdings’ actual results and could cause their actual
results or the benefits of the proposed transaction to differ
materially from those expressed in any forward‐looking statements
made by, or on behalf of NSG or VR Holdings. If any of these
assumptions or opinions proves incorrect, any forward-looking
statements made on the basis of such assumptions or opinions may
also prove materially incorrect in one or more respects and may
cause future results to differ materially from those contemplated,
projected, estimated or budgeted in such forward-looking
statements.
The proposed transaction is subject to risks and uncertainties,
including: (A) that NSG and VR Holdings may be unable to complete
the proposed transaction because, among other reasons, conditions
to the closing of the proposed transaction may not be satisfied or
waived; (B) uncertainty as to the timing of completion of the
proposed transaction; (C) the inability to complete the proposed
transaction due to the failure to obtain the NSG shareholder
approval for the proposed transaction or the failure to satisfy
other conditions to completion of the proposed transaction,
including that a governmental entity may prohibit, delay or refuse
to grant approval for the consummation of the transaction; (D) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement; (E) risks
related to disruption of management’s attention from NSG’s ongoing
business operations due to the proposed transaction; (F) the effect
of the announcement of the proposed transaction on NSG’s
relationships with its customers and agents, operating results and
business generally; (G) the outcome of any legal proceedings to the
extent initiated against NSG, VR Holdings or others following the
announcement of the proposed transaction and (H) the effects of the
COVID‐19 pandemic and associated government actions on NSG’s
operations and financial performance, as well as NSG’s and VR
Holding’s management’s response to any of the aforementioned
factors. The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included herein and elsewhere,
including the risk factors included in NSG’s most recent Annual
Report on Form 10‐K and Quarterly Report on Form 10‐Q and other
documents of NSG on file with the SEC. Any forward‐looking
statements made in this material are qualified by these cautionary
statements, and there can be no assurance that the actual results
or developments anticipated by NSG and/or VR Holdings will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, NSG or its business or
operations. Except as required by law, the parties undertake no
obligation to update publicly or revise any forward‐looking
statement, whether as a result of new information, future
developments or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20220126006009/en/
Brian McLeod - Chief Financial Officer (334) 897-2273
National Security (NASDAQ:NSEC)
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