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Activist investor Carl Icahn lodges Delaware lawsuit against AmTrust

Last updated: 15:58 21 May 2018 EDT, First published: 15:43 21 May 2018 EDT

Gavel and legal book
Other shareholders are applauding Icahn's efforts to overturn the bid to take AmTrust private

Carl Icahn, the fiery billionaire activist investor, is going mano a mano with the family that controls the insurer AmTrust Financial Services Inc (NASDAQ:AFSI) by filing a lawsuit against them for taking the insurer private “at the wrong price and at the wrong time.”

The lawsuit, lodged Monday in a Delaware court, charges AmTrust as well as its chief executive officer Barry Zyskind and board members George and Leak Karfunkel with orchestrating a transaction that puts the interests of AmTrust’s controlling family first and squeezes out its public shareholders.

“This proposed going private transaction is the Zyskind/Karfunkel family’s final insult to AmTrust’s public shareholders,” wrote Carl Icahn, who holds a 9.4% stake in the insurer in the complaint.

Three months ago, a collection of shareholders, which include the family who set up AmTrust as well as its chief executive officer, moved to take the insurer private in a deal worth roughly US$2.7bn.

Keeping to his name as a sharp-tempered deal maker, Icahn is fighting the AmTrust deal with vigor and gaining the support of additional minority shareholders in his battle to contest it.

Today, Arca Capital, a Prague-based investment firm with a 2.4% stake in AmTrust, welcomed Icahn’s bold move to overturn the bid to take the insurer private. In a statement, the group’s executives expressed outrage over the 50% decline in AmTrust’s share price since January of last year.

“During that 15 month period, the stock has declined from over $27 per share to under $13 per share amidst no significant changes to the business, Arca Capital executives said. “While ordinary shareholders have lost retirement and college funds, Barry Zyskind and his in-laws are now trying to privatize the firm at what Arca believes is an absurdly low valuation.”

On the top of Icahn’s grievances is that the deal price of US$13.50 per share represents less than half of what AmTrust was trading for in early last year.

“The going-private transaction is an opportunistic attempt to take control of a company at historic lows, right before a period of expected recovery and possible earnings growth,” Icahn said in the complaint.

READ: Carl Icahn fights attempt to take AmTrust Financial Services private sending shares surging

Icahn also takes issues with AmTrust’s board “stealthily” setting a record date of April 5, which could result in a shareholder vote on the deal that “severely tilts the playing field to advantage the Zyskind/Karfunkel families while blatantly disadvantaging the public shareholders.”

AmTrust is one of America’s largest workers’ compensation insurers, protecting U.S. workers by bearing responsibility for their medical care and lost wages from job-related injuries.

Shares were flat at US$13.84 in late afternoon trade.

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