Shares of insurance company Harleysville Group, Inc. (Nasdaq: HGIC) surged almost 86 percent from Wdnesday’s closing price, in morning trading on Thursday after Nationwide Mutual Insurance Co. confirmed that it will acquire Harleysville for $760 million to expand its commercial insurance lines of business and add capacity on the East Coast.
Harleysville shares touched a 52-week high of $58.60, up from Wednesday’s closing price of $31.52.
“Harleysville is very pleased to join forces with Nationwide in a transaction that will enable us to expand our business for our independent agency partners and to enter important new markets from a position of even greater strength,” said Michael Browne, President and Chief Executive Officer of Harleysville in a September 29 press release.
Under the terms of the agreement, the Pennsylvania-based Harleysville Mutual would merge into Nationwide Mutual and Harleysville Group, Harleysville Mutual’s publicly traded subsidiary, would be merged with a newly formed subsidiary of Nationwide Mutual. Each public stockholder of Harleysville Group would receive $60.00 per share in cash. Upon closing, Harleysville Group would be a wholly owned subsidiary of Nationwide.
The transactions are subject to customary closing conditions, including, among others, approvals from stockholders of Harleysville Group; policyholders of Harleysville Mutual and Nationwide Mutual; the Pennsylvania Insurance Department; the Ohio Department of Insurance; and various other regulatory bodies. The transactions are expected to close in early 2012.