Leader in Commercial Auto Insurance Seeks To Expand Capabilities
In an all cash deal valued at approximately $338 million, the Progressive Corporation has signed a definitive agreement to acquire all of the outstanding Class A and Class B common shares of the Protective Insurance company. The deal will allow the top 25 P&C insurer to continue to expand its commercial lines capabilities.
“As a leader in commercial auto insurance, we’re excited to expand our capabilities with the expertise Protective offers in larger fleet and affinity programs and by providing additional product lines for us to add to our portfolio,” says Commercial Lines President, Karen Bailo. “Our Commercial Lines business provides one of our greatest opportunities to expand our addressable market and grow. This move allows us to add products that will help us support larger fleets and brings expertise in workers’ compensation coverage for the transportation industry, which are new areas of business for us and can help us to meet the needs of our commercial customers. We look forward to working with the employees of Protective and appreciate the knowledge they bring.”
Aiming for a 2021 closing
While certain customary closing conditions and regulatory approvals, including the approval by Protective’s Class A shareholders, both insurers estimate that the acquisition will close by the end of the third quarter of 2021. It was noted in the official announcement, however that a significant step already has been achieved with the unanimous approval of Protective’s Board of Directors.
“The Special Committee of the Board has been focused on what is in the best interest of Protective and its stakeholders and we are pleased to achieve that objective,” said John D. Nichols, Jr., Chair of the Special Committee of Protective’s Board. “This transaction aligns well with the direction of Protective, provides stability and opportunity for growth and will deliver a significant, immediate cash premium to Protective’s shareholders—all of which the Special Committee and the Board believe creates the ideal outcome for Protective. The Board would also like to recognize the Shapiro family for its over 40-year stewardship of Protective.”
“We are excited to announce this agreement with Progressive, which is a milestone in Protective’s history,” said Jeremy Johnson, Protective’s Chief Executive Officer. “With Progressive’s scale and resources, we expect to deliver greater value to our policyholders, while continuing to provide the exceptional service they have come to expect from us. Progressive shares our commitment to excellence in serving customers, and we are confident they are the ideal owner for Protective. Together, we will be able to deliver innovative offerings and superior customer service to even more customers across the country.”
Mr. Johnson continued, “This transaction is truly a testament to the hard work and dedication of our talented team. By combining with Progressive, we expect Protective and its employees will have greater opportunities to grow as part of a larger and more diversified organization.”
Further details of the transaction
Upon the completion of the transaction, Protective shareholders will receive $23.30 per share in cash from Progressive. Progressive will fund the purchase through liquid investments on hand. The per share price represents a 49.1% premium and 63.2% premium, respectively, to Protective’s unaffected 30-day volume-weighted average Class A and Class B share prices as measured on February 12, 2021.
Progressive plans to maintain Protective’s offices in Carmel, Indiana and retain Protective’s employees.
Baker & Hostetler LLP is serving as legal advisor to Progressive. Piper Sandler & Co. is serving as financial advisor to Protective and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Protective.
More about Progressive
The Progressive Group of Insurance Companies makes it easy to understand, buy and use auto insurance. Progressive offers choices so consumers can reach us whenever, wherever and however it’s most convenient – online at progressive.com, by phone at 1-800-PROGRESSIVE, on a mobile device or in-person with a local agent.
Progressive provides insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes; it is the third largest auto insurer in the country, a leading seller of motorcycle and commercial auto insurance, and one of the top 15 homeowners insurance carriers.
Founded in 1937, Progressive continues its long history of offering shopping tools and services that save customers time and money, like Name Your Price®, Snapshot®, and HomeQuote Explorer®.
The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, trade publicly at NYSE:PGR.
More about Protective Insurance
Based in Carmel, Indiana, Protective Insurance Corporation serves as the publicly-traded holding company for several property-casualty insurance subsidiaries including Protective Insurance Company, Sagamore Insurance Company and Protective Specialty Insurance Company. Through its subsidiaries, Protective provides liabilities and workers’ compensation coverage for trucking and public transportation fleets, along with trucking industry independent contractors.
