Offer extended for Donegal Group stock
Shareholder wants another $28.9M worth, agrees to drop some of his conditions BY TIM MEKEEL, Business Editor
A Florida investor has extended his offer to buy $28.9 million worth of Donegal Group stock and dropped conditions which the firm had criticized.
Gregory Mark Shepard, of Bradenton, Fla., a Donegal Group shareholder since 2005, said Monday his offer of $30 per Class B share will stand until May 20.
It was to run out last Friday.
Shepard also has pulled his condition that Donegal Group let him designate three directors to the boards of Donegal Group and its majority shareholder, Donegal Mutual.
In addition, Shepard has withdrawn his condition that Donegal Group forgo new stock-option plans for management, such as the one approved by Donegal Group shareholders Friday.
However, Shepard continues to require that at least 925,000 Class B shares be tendered to him.
He also continues to require that the offer obtain various regulatory approvals before he actually buys the Class B shares.
Donegal Group had called Shepard's offer "illusory" because of the many conditions attached to it.
The Marietta-based insurance holding company had recommended that shareholders spurn the offer for that reason.
Shepard announced the offer March 20, at a price that's 42 percent above the closing price of Class B shares the day before.
Shepard already owns 3.6 million Class A shares and 397,100 Class B shares, which he acquired for $58.6 million.
Those holdings give him 9.99 percent of Donegal Group, making him the firm's second-largest shareholder.
If his offer is completely successful, his holdings would rise to 22.7 percent.
However, Donegal Mutual would remain the majority shareholder by far with a 65.9 percent stake.
As of Friday, 371,600 Class B shares had been tendered to Shepard, or roughly 38.6 percent of the shares he's pursuing.
Shepard is the former chairman and president of American Union Insurance Co. and former co-owner of Country Acres Land Corp., an Illinois developer.
A lawyer, Shepard says his main occupation for the past five years has been investing in securities.
Shepard has long criticized Donegal Group management, urging it to explore strategic alternatives such as a sale or merger to boost the return to shareholders.
Most recently, Shepard has criticized the quantity of stock options being granted to Donegal Group management.
He commissioned a study by Duff & Phelps that found Donegal Group's issuance of options, in Shepard's words, "far exceeds" the amount of options issued by its peer companies.