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National Interstate tender offer withdrawn, shares fall

By Jim Mackinnon
Beacon Journal business writer

American Financial Group has ended its quest to buy Richfield specialty insurer National Interstate following intense, public opposition from other shareholders and an unfavorable court ruling.

Cincinnati-based AFG, which owns 52 percent of National Interstate, said late Sunday it formally withdrew its tender offer to buy up all remaining shares of the company.

The announcement sent National Interstate shares tumbling on Monday. Shares closed down $3.11, or 10.3 percent, to $26.99.

The decision to withdraw the tender offer followed a court hearing on Friday in U.S. District Court in Cleveland in which the judge said he would grant a preliminary injunction that would halt the tender offer.

AFG’s $30-per-share tender offer, for a total of $285.6 million, was scheduled to expire at midnight Monday.

“AFG believes that the $30 per share all-cash tender offer would have provided National Interstate’s shareholders with compelling value at a significant premium to the market price prior to the announcement of the offer,” AFG said in a statement. “AFG continues to be the majority shareholder of National Interstate and highly values National Interstate’s business, management team and employees. National Interstate continues to represent an important strategic component of AFG’s overall operations.”

Four members of National Interstate’s 10-person board are current senior executives of AFG; a fifth board member recently retired from AFG.

National Interstate Corp.’s founder, Alan Spachman, who remains a company director, was the most vocal in opposing AFG’s buyout offer and National Interstate’s response. He is also the company’s third largest shareholder and its former chief executive officer.

Spachman earlier this month sought a temporary restraining order in U.S. District Court for the Northern District of Ohio to stall the buyout attempt.

Spachman alleged in his federal lawsuit that the buyout process violated federal securities laws, Ohio law and was a breach of fiduciary duty. Spachman did say he could favor a buyout if the process was changed and shareholders were paid more money.

Also publicly opposing the tender offer process was mutual fund firm T. Rowe Price, which is National Interstate’s fourth largest shareholder.

Jim Mackinnon can be reached at 330-996-3544 or


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