Fosun of China in US Insurance Deal

31 Dec 2014 | Author: | No comments yet »

Andrews & Springer LLC.

WILMINGTON, Del., Dec 31, 2014 (BUSINESS WIRE) — Andrews & Springer LLC, a boutique securities class action law firm focused on representing shareholders nationwide, is investigating potential breach of fiduciary duty claims against the Board of Directors of Meadowbrook Insurance Group, Inc.Hong Kong/Bengaluru: Chinese conglomerate Fosun International Ltd is making its first foray into the US insurance market and buying property and casualty insurer Meadowbrook, a deal that it said would help it secure funds for further acquisitions. The deal, the latest in a buying spree by Fosun that has seen it spend more than $4 billion in two years, would also be the first full purchase of a US insurer by a Chinese company and comes as the Beijing government encourages local firms to extend their reach beyond emerging markets to Western financial firms. On December 30, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Fosun will acquire Meadowbrook in a merger worth $433 million.

As a result of the merger, Meadowbrook shareholders are only anticipated to receive $8.65 per share in cash in exchange for each share of Meadowbrook. Founded two decades ago by four university graduates in Shanghai to sell medical equipment such as protein-testing kits, Fosun has grown to become one of China’s largest conglomerates, with mining, real-estate and insurance interests.

Like Warren Buffett and his Berkshire Hathaway Inc., Fosun has said it intends to use funds from its insurance business to support long-term investments. While the Company claims that shareholders will receive a premium for their shares, Fosun, with over $50 billion in total assets, is paying only 1.04x tangible book value for Meadowbrook. As part of its drive to build a “world-class investment group,” the Shanghai company, which tiptoed into foreign markets by taking small stakes in companies such as Club Méditerranée SA, has been making bigger acquisitions, including deals this year for Tokyo-based real-estate management firm Idera Capital Management Ltd. and the insurance arm of Portugal’s Caixa Geral de Depósitos. Shares of Meadowbrook, a speciality commercial insurance underwriter and insurance administration services company, were up 14 per cent at $8.15 in extended trading.

Fosun’s Guo is seeking to broaden the conglomerate’s access to capital in order to fund a series of acquisitions he hopes will transform the group’s business model. In the past two years, those deals have largely been funded with bank credit and leverage, but now Guo hopes to gain a more sustainable source of funds by buying into financial firms. Guo, who Forbes estimates has a net worth of about $4.3 billion, is also involved in a takeover bid for French holiday operator Club Mediterranee SA with Italian tycoon Andrea Bonom. You may also follow us on LinkedIn –, Twitter – or Facebook – for future updates. The group has also expressed interest in bidding for Portugal’s Novo Banco SA, the new bank created in the wake of the failure of Banco Espirito Santo SA, Chinese media said.

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