The National Security Group, Inc. (NASDAQ: NSEC) shares surged 64% during the pre-market trading session of Thursday after the company disclosed that it has inked a merger agreement with VR Insurance Holdings, Inc. As per the merger deal, VR Holdings has decided to purchase all of the outstanding common shares of The National Security Group, Inc. for $16.35 per share in cash. It highlights a 77% premium to the closing share price as of January 25, 2022.
VR Holdings is expected to continue to rely on NSG's fully owned property and casualty and life insurance companies' current operations and infrastructure after the completion. Brian McLeod, the Company's current CFO, will be the COO of the Company's insurance companies as well as the CFO of VR Holdings.
Furthermore, NSG is dedicated to its clients and autonomous regulatory partners and does not anticipate any major changes in its day-to-day operations. NSG will become a private company after the merger. Moreover, it also has the freedom and resources to advance its next stage of growth once the transaction is completed.
Additionally, the Company’s Board of Directors has mutually authorized the transaction and proposed that NSG’s shareholders vote in favor of the transaction. The agreement mandates authorization by owners of the majority of NSG’s outstanding common shares. The acquisition is likely to complete by the end of the second quarter of 2022.
As per the agreement, the price per share may be reduced if NSG's insurance companies' combined statutory capital and surplus are less than $43 million. Moreover, VR Holdings may terminate the agreement if the combined statutory capital and surplus is less than $38.7 million. As of December 31, 2021, the insurance subsidiaries' statutory financial statements are likely to meet the $43 million barriers.