Farm Bureau Property & Casualty Insurance Co. and FBL Financial Group today announced that they have reached a definitive agreement under which Farm Bureau Property & Casualty (FBPCIC) will acquire all of the outstanding shares of FBL Financial Group Class A and Class B common stock that neither FBPCIC nor the Iowa Farm Bureau Federation (IFBF) currently own for $56 per share in cash. Following the unanimous recommendation of a special committee of the FBL Financial Group board, the transaction was unanimously approved by FBL Financial Group’s board of directors.
Upon completion of the transaction, Iowa Farm Bureau Federation will continue to be the majority owner of the company, and FBL Financial Group common stock will cease trading on the New York Stock Exchange. FBL Financial Group is based in West Des Moines.
The per share purchase price represents a 50% premium to FBL Financial Group’s closing share price of $37.25 on Sept. 30, 2020, a 19% premium to FBPCIC’s initial proposal of $47 per share on Sept. 4, and a 56% premium to FBL Financial’s 90-day volume-weighted average share price as measured on Sept. 3. Based on the agreed price of $56 per share for Class A common stock and Class B common stock not owned by FBPCIC or IFBF as of Friday, the aggregate cash purchase price is about $528 million.
In making its recommendation, the special committee, with advice from independent financial and legal advisers, conducted a detailed review of FBPCIC’s offer. Among other factors, the committee evaluated the offer relative to the company’s stand-alone prospects, including management’s expectation for adjusted operating income in the range of $88 million to $92 million in 2020 and its projection for adjusted operating income of $96.9 million in 2021; an appraisal valuation produced by a leading actuarial firm; and taking into consideration feedback received from several minority shareholders.
The agreement follows several rounds of “vigorous negotiation” in which Farm Bureau Property & Casualty increased its offer multiple times, and agreed FBL Financial should continue to pay its regular quarterly dividend through the closing of the transaction, according to a press release from FBL Financial.
“The Special Committee’s focus has been on maximizing value for FBL Financial Group’s unaffiliated shareholders, and this transaction delivers immediate cash value to them at a significant premium,” said Paul Larson, chairman of the committee.
“Based on the unanimous recommendation of the Special Committee and deep knowledge of the company, the FBL Financial Group Board unanimously concluded that this transaction is the best way to deliver maximum and certain value to our unaffiliated shareholders,” Larson said. “FBPCIC has been a long-term partner of FBL Financial and shares our dedication to protecting the livelihoods and futures of our customers, and we are confident that this transaction is in the best interest of unaffiliated shareholders.”
Richard Felts, chairman of the board of FBPCIC, said: “FBL Financial Group and its affiliated companies make up a superb organization. We look forward to supporting its future as a private company, and to continue working to grow and strengthen the organization’s relationships with its customers and communities.”
The transaction, which is expected to close in the first half of 2021, is subject to the receipt of regulatory and FBL Financial Group shareholder approval, including approval from a majority of unaffiliated FBL Financial Group shareholders, and the satisfaction of specified closing conditions.