The proposed stock acquisition of EMC Insurance Group Inc. by Employers Mutual Casualty Co. appears to be a good deal for the company’s shareholders, says Adam Claypool, managing principal of Bridgepoint Investment Banking. I asked Claypool, who is not an EMC shareholder or an adviser to any of the company’s shareholders, for his opinion of the deal, which calls for EMCC to buy the 45 percent of public shares it doesn’t already own at a 26 percent premium. 

“The 26 percent premium is a good premium for an illiquid stock,” he said. Despite having a market cap of more than a half-billion dollars, EMCI’s trading volume is similar to that of a much smaller Iowa public company — NewLink Genetics, he noted. 

“This stock has generally underperformed the S&P 500 over the past five years, with a very pronounced underperformance in 2017 and 2018,” Claypool said. 

The process also appears to be shareholder-friendly, as it will allow the minority shareholders to approve the deal after a special appointed board gives its approval, he said. “Based on our quick review of it, I believe shareholders are going to approve it.” 

Read more about the EMC’s plan here.