Fosun International will acquire Meadowbrook Insurance Group for about $433 million. The Chinese company will pay $8.65 in cash for each share of the Michigan-based insurance company.
Fosun International said plans to use the profits from the insurance company to support its long-term investments.
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"This transaction is the culmination of a thorough strategic review process to maximize shareholder value," Meadrowbrook president and CEO Robert S. Cubbin said in a statement. "We believe this is a positive outcome for our shareholders, who will receive significant value; our employees, who will benefit from enhanced opportunities as part of a larger, global organization; and our customers, partners and policyholders, who will benefit from an even stronger specialty risk, insurance and service provider."
TheStreet Ratings team rates MEADOWBROOK INS GROUP INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MEADOWBROOK INS GROUP INC (MIG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MIG, with its decline in revenue, underperformed when compared the industry average of 21.5%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.52, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MEADOWBROOK INS GROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Insurance industry average. The net income has decreased by 9.9% when compared to the same quarter one year ago, dropping from $5.52 million to $4.97 million.
- In its most recent trading session, MIG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: MIG Ratings Report