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Tower To Acquire SUA In $107m Transaction

SUA shareholders would receive 0.28 shares of Tower for each share of SUA

Tower Group (Tower), a provider of property and casualty insurance products and services, has entered into a definitive agreement with Specialty Underwriters’ Alliance (SUA), a property and casualty insurance company, to acquire the latter at $107 million.

As per the agreement, SUA shareholders would receive Tower common stock equal to $6.72, which is equal to 0.28 shares of Tower for each share of SUA, of $24. The transaction is expected to close approximately at the end of 2009.

Tower projects that its 2010 diluted earnings per share (EPS) will be in between $3.50 and $3.70, which accounts for the additional shares expected to be issued. The combination of Tower’ and SUA’ specialty businesses is expected to creates a much larger, more scalable and profitable specialty business with strong growth potential.

Tower has retained Debevoise & Plimpton as its legal advisor. FBR Capital Markets acted as SUA’ exclusive financial advisor, and Stroock & Stroock & Lavan acted as SUA’ independent legal advisor.