U.S based insurance company Allstate Corp (ALL) has announced its intention to acquire National General Holdings Corp (NGHC) with an aim of expanding its insurance business even though the insurance sector has been greatly affected by the pandemic due to reduced claims emanating from reduced road traffic.
National General declares automobile insurance as its core business, its other business include recreational vehicle, commercial auto and motorcycle business and personal vehicle business.
Discussions on the same are on their final stages and capturing everything in context the deal will be costing around $4 billion.
Once the deal is closed, shareholders of National General will receive $32 per share in cash and an additional closing dividend of $2.50 per share. This signifies that everything in total will cost $3.92 billion, plus an extra 69% share premium.
Back in April, Allstate said it would return in excess of $600 million in premiums to their clients as stay at home orders reduced the frequency at which Americans traveled by road by 40% to 55%.
According to Allstate’s CEO Tom Wilson, the board of National General has already approved the deal further adding a breakup fee of $132.5 million will be included in the deal.
“Acquiring National General accelerates Allstate’s strategy to increase market share in personal property-liability and significantly expands our independent agent distribution,” added the CEO.