Bloomberg News

Nationwide Agrees to Acquire Harleysville for $60 a Share

September 29, 2011

(Adds closing share price in the fifth paragraph.)

Sept. 29 (Bloomberg) -- Nationwide Mutual Insurance Co., the eighth-largest U.S. personal auto insurer, agreed to buy rival Harleysville Group Inc. in a deal that values the Pennsylvania-based target company at about $1.6 billion.

Nationwide will pay $60 a share in cash for each publicly held Harleysville share, the two companies said today in a statement. Minority investors will receive about $760 million cash, while the target company’s majority shareholder, Harleysville Mutual Insurance Co., will combine with Nationwide and won’t receive a cash payment, Nationwide Chief Financial Officer Mark Thresher said in an interview.

Nationwide Chief Executive Officer Stephen Rasmussen, who took the job in 2009, is making his first large acquisition for the Columbus, Ohio-based carrier. The purchase price is 90 percent higher than Harleysville’s closing price of $31.52 yesterday on the Nasdaq Stock Market, and more than double the $25.33 price on Sept. 22, the day before takeover talks between the two companies were reported by Bloomberg News.

“With Harleysville’s expertise in commercial lines and Nationwide’s complementary geographic distribution, there will be a substantial opportunity to increase market share,” Rasmussen said in the statement.

Harleysville jumped $27.44, or 87 percent, to $58.96 at 5:19 p.m. in New York trading. It had slipped 14 percent this year through yesterday.

Options, Restricted Stock

Holders of Harleysville options and restricted stock will get about $80 million, boosting Nationwide’s total cash outlay to about $840 million, said Eric Hardgrove, a spokesman for Nationwide. The Harleysville valuation of $1.6 billion is based on the 27.2 million shares outstanding as of Aug. 2.

Harleysville Mutual is owned by its policyholders, who Thresher said won’t receive a dividend tied to the deal.

“At this point we have not planned any sort of consideration to them, in a cash consideration,” Thresher said. “We believe them moving over and becoming policyholders of a larger, stronger mutual organization is a benefit to them.”

Nationwide is owned by its policyholders.

--Editors: Steve Dickson, William Ahearn

To contact the reporter on this story: Andrew Frye in New York at

To contact the editor responsible for this story: Dan Kraut at

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