April 9, 2013
/PRNewswire/ -- (NASDAQ: "DGICB") –
Gregory M. Shepard
today blasted Donegal Group, Inc. ("Donegal") CEO
and the Boards of Directors of Donegal and Donegal Mutual Insurance Company ("Donegal Mutual") for advising Donegal's Class B shareholders on
April 3, 2013
not to tender their shares to Mr. Shepard at
According to Mr. Shepard, "
and the Boards of Donegal and Donegal Mutual have once again shown that they will stop at nothing to entrench themselves and protect their fiefdom at the expense of shareholders.
has not delivered value for the shareholders, in my opinion. He has instead delivered value only for himself and his friends on those Boards."
Mr. Shepard continued, "I have over a
investment in Donegal. Neither Don Nikolaus nor any member of the Boards comes close to matching my financial investment in Donegal. And yet, Donegal and Donegal Mutual would deprive me of Board representation, and are even willing to oppose the Class B shareholders receiving
per share, just to protect their fiefdom."
Mr. Shepard asked, "How can
and his Boards call my tender offer 'illusory' when it's their intentional failure to meet some of the Offer's conditions that would deny the Class B shareholders of any chance of receiving
per share? Donegal's Recommendation on SEC Form 14D-9 did not address the adequacy of my Offer consideration, even though
per Class B Share represents a 42% premium over the pre-Offer price. What Donegal's shareholders want to know, in my opinion, is whether
and his Boards think
per Class B Share is adequate, not how long their attorneys believe it might take to satisfy the tender offer's regulatory conditions."
Mr. Shepard continued, "If Don Nikolaus and his Boards think that
per Class B share is not adequate, then what realistic plan do they propose to achieve
per Class B share?
' strategy to focus on premium rate increases, fortuitous avoidance of catastrophic storms in an era of global warming, and other operational improvements, has failed to realize the true value of Donegal's shares. It is Nikolaus' strategy for increasing shareholder value, not my Offer, that is illusory and devoid from today's market realities, which in my opinion are being driven by GEICO, Progressive, USAA, and a few other larger mutuals with stronger managements, stronger financial resources, a broad spread of risk, and a better track record of providing a reasonable return to shareholders."
Mr. Shepard added, "Donegal's 14D-9 Recommendation addressed only Class B stockholders. Apparently, the Donegal Board sees no need to talk to its Class A stockholders about a
per Class B tender offer from its largest independent shareholder by far. Yet they should address the Class A stockholders and explain to them why there are approximately 6,700,000 Class A granted stock options, representing 33% of the total outstanding Class A shares. They should explain why on
March 19, 2013
– the day before I announced my tender offer – the Class A shares closed at
while the Class B shares closed at
per share (a 44% premium to the Class A shares). They should explain why it is, if Donegal's strategy has been so successful, that the Class A shares trade approximately 30% lower than their peak of
(over 6½ years ago)."
Mr. Shepard urges shareholders to call up
at 800-877-0600, and
at 717-426-1931, and express your sentiments, if you are disappointed in the price of your stock and disappointed that
and these Board members are attempting to thwart your opportunity to receive
per share for the Class B stock.
Mr. Shepard also demands to know the identity of the Donegal Mutual director who, on
February 28, 2013
, purchased 800 Class B shares at
per share and 388 Class B shares at
per share, as identified in Item 6 of Donegal's 14D-9.
Mr. Shepard asked, "Who is this mystery director who was buying Class B shares? Why is Donegal keeping his identity a secret from the shareholders?" Mr. Shepard calls on Donegal to amend its 14D-9 to reveal the identity of this mystery director.