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Strategies & Market Trends : Arbitrage Plays
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To: Allen Furlan who wrote (34)7/16/1999 12:32:00 PM
From: LauA  Read Replies (3) of 376
 
Take a look at NEIC. This is a tiny Maine casualty insurance company that is being bought by a tiny New Jersey insurance company MOTR. The deal has been on the table since last fall, with formal terms since January: choice of $3.30/share cash or 1 share of MOTR for each 5.25 shares of NEIC. (Or 0.1905 MOTR for each NEIC.) Since MOTR is currently selling for $13/share, and 3.30/0.1905=17.32, it is unlikely that shareholders will choose stock. (MOTR has gone through the charade of authorizing enough new stock to take out the NEIC holders.) NEIC can be bought at $3, and tendered at $3.30.

Both companies held shareholder meetings Monday 7/12. MOTR shareholders agreed to the terms. Not enough NEIC shareholders were represented to meet the Maine quorum requirements of 75%. (Actual number of shares represented was ~41%.) When a quorum is present, only a simple majority is needed to agree to merger terms. NEIC will meet again 7/20. The company has been on the phone scaring up proxies. Co. says that shares are widely held in Maine by small shareholders 100-1000 shares a piece. The original drop dead date of 7/20 has been extended to 7/23.

So it looks to me like a ~10% return within a short time - perhaps two weeks or a month. (I assume that the past 6 months have been spent buffing up the Maine Insurance Commission.)

Lau
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