ACE (NYSE:ACE), a casualty and property insurer, said on Thursday it signed a deal to buy Penn Millers Holding Co. (NASDAQ:PMIC) for $107 million cash to enhance its presence in the US agricultural insurance market.
ACE said it would pay $20.50 per share, reflecting a 26% premium to Penn Millers' Wednesday close of $16.30.
Penn Millers stocks shot up 23.49% to trade at $20.13 a share on the Nasdaq markets in late Thursday trading while ACE's shares tumbled 25 cents, or 0.39%, to trade at $63.94.
Penn Millers, an established underwriter of agri-related insurance, has served the agribusiness market since 1887 and currently operates in 34 states. It is based in Wilkes-Barre, Pennsylvania.
ACE’s Chairman Brian Dowd said that the Penn Millers deal will provide the company with a specialty niche business that complements its current agricultural market capabilities.
ACE expects the deal to immediately add to its earnings and book value per share.
In a news statement, Penn Millers’ CEO Douglas Gaudet said: “ACE’s national platform and product capabilities will provide strong growth opportunities to our well-established agency network."
“Our state-of-the-art loss control and claim services in agribusiness and other specialty niches will round out ACE’s agricultural insurance capabilities."
There is no financing condition and the purchase price will be made with ACE’s available cash on hand, the company said.
The deal, subject to customary closing conditions and regulatory approval, is expected to finish by the end of first quarter 2012.