NEW YORK (TheStreet) -- Shares of Meadowbrook Insurance Group (MIG) are skyrocketing, higher by 19.64% to $8.53 on heavy volume in afternoon trading Wednesday, after the company announced that it has agreed to be acquired by China's Fosun International for $8.65 per share in cash.
Analysts at FBR Capital said it views Meadowbrook's acquisition deal as a positive for its shareholders and does not think there will be any regulatory issues with a Chinese buyer.
Fosun International will acquire Meadowbrook Insurance Group for about $433 million, and said it plans to use the profits from the company to support its long-term investments.
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The Michigan-based casualty insurance company is a specialty commercial insurance underwriter and insurance administration services company.
About 3.24 million shares of Meadowbrook Insurance Group traded hands as of 2:44 p.m. ET, compared to its average trading volume of about 178,651 shares per day.
Separately, 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