BLOOMINGTON, Ill., Oct. 7, 2013 /PRNewswire/ -- (NASDAQ: "DGICA" and
"DGICB") – Gregory Mark Shepard
announced today that he has sent a letter to the Boards of
Directors of Donegal Group Inc. ("Donegal Group") and Donegal
Mutual Insurance Company ("Donegal Mutual") proposing an amicable
transaction.
Mr. Shepard has disclosed this proposal in an amendment to his
Schedule 13D, which was filed today and is available at
www.sec.gov.
In the amicable transaction proposed in his letter, Mr. Shepard
would offer to purchase the 957,136 shares of Class B Common Stock
of Donegal Group ("Class B Shares") that are not already owned by
him or Donegal Mutual at a negotiated price within a range of
$33 - $37 per share, and a mutual
property and casualty insurance company would purchase the
9,021,350 shares of Class A Common Stock of Donegal Group ("Class A
Shares") that are not already owned by him or Donegal Mutual.
Mr. Shepard knows of two U.S.-based mutual property and casualty
insurers, both of which are much larger than Donegal Group and
Donegal Mutual and rated A or higher by A.M. Best, who would be
interested in such a transaction.
Alternatively, if Donegal Group and Donegal Mutual elect to
enter into a global transaction with an acquiring mutual property
and casualty insurance company, Mr. Shepard would agree to accept
whatever price per share of Class A Shares that are not already
owned by him or Donegal Mutual that Donegal Group negotiates with
the acquirer as the price per share for both his Class A Shares and
Class B Shares.
If the Boards of Directors of Donegal Group and Donegal Mutual
accept the amicable transaction proposed in his letter, Mr. Shepard
would suspend his plans to acquire up to 962,636 additional Class B
Shares in the open market and privately negotiated
transactions.
On Friday, October 4, 2013, the
last full trading day before Mr. Shepard publicly announced his
proposal, the closing prices for Class A Shares and Class B Shares
were $14.30 and $18.56, respectively.
Mr. Shepard further notes that Donegal Group's Investor
Presentation titled "Pursuing Effective Business Strategy in
Regional Insurance Markets" to "Achieve Book Value Growth By
Implementing Plan" dated September 20,
2013 and filed with the SEC, makes no mention of the
substantial dilution of Donegal Group's shareholders as a result of
the extraordinarily high number of options granted to Donegal Group
insiders and employees relative to industry peers. Mr.
Shepard notes that during the five years between 2007 and 2012,
stock option issuance grew by an astounding 181% or 36.2% on
average per year, which reduced the increase in average fully
diluted book value to a very disappointing 1.6% per year.
This Investor Presentation was filed as Exhibit 99.1 to Donegal
Group's Form 8-K on September 20,
2013, and is available at www.sec.gov.
SOURCE Gregory Mark Shepard