The terms of the deal were $228 million for PMA common shares and $137 million for its debt.
As part of the agreement, Old Republic will issue 0.55 shares of its common stock in exchange for each outstanding common share of PMA. The exchange may be adjusted up or down, depending on the price of Old Republic's common stock preceding the completion of the merger, but will not exceed 0.60 or be less than 0.50.
The initial exchange ratio represents a premium of about 15% to the closing price of PMA's common stock on June 8 of $6.17, which was the last trading day before the signing of the merger agreement. The transaction is expected to close during the third quarter of this year.
Old Republic shares were flat at $12.91 in Thursday's premarket session, while PMA Capital rose 9.7% to $6.70 on the announcement.
-- Reported by Andrea Tse in New York
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