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FBL Financial Extends Deal Approval Deadline

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What You Need to Know

  • Iowa regulators have approved the deal.
  • Egan-Jones and Glass Lewis have blessed it.
  • Institutional Shareholder Services dislikes it.

FBL Financial Group Inc. may be having trouble getting enough shareholder votes to go private.

The West Des Moines, Iowa-based insurer announced Thursday that it’s pushing the shareholder approval deadline for a proposed acquisition by a sister company back to May 21.

FBL has been trying to get approval for the deal from a majority of the shares held by outside investors through a special meeting process.

“Based on a preliminary assessment of votes received by the company’s proxy solicitor, the unaffiliated shareholder vote had not been obtained as of April 29, 2021,” FBL said in a notice filed with the U.S. Securities and Exchange Commission. “Accordingly, the special meeting is being adjourned to provide the company with additional time to solicit proxies from its shareholders to obtain the unaffiliated shareholder vote.

The History

The Iowa Farm Bureau Federation created FBL in 1944 and owns about 60% of FBL’s stock. The parent company also created a property and casualty insurer,  Farm Bureau Property & Casualty Insurance Company, in 1939.

FBL became a publicly traded company in 1999, after the Iowa Farm Bureau Federation sold some of its shares to public investors through an initial public offering.

FBL has been facing the effects of the COVID-19 pandemic, low interest rates and new accounting rules that tend to make the earnings of annuity issuers look more volatile.  Company managers announced in September that Farm Bureau P&C might take it private by buying outside investors’ shares.

The companies agreed to increase the deal price to $56 per share, from an initial price of $37.25 per share that was discussed in September.

Reactions

Insurance Regulators approved the deal earlier this month.

Two organizations that evaluate corporate deals, Egan-Jones and Glass Lewis, have recommended that shareholders vote to accept the Farm Bureau P&C offer.

A third investor advisory organization, Institutional Shareholder Services, called the proposed price “uncompelling” and recommended that shareholders vote against the deal.

Capital Returns Management LLC has also been encouraging shareholders to reject the deal. “The proposed merger materially undervalues FBL and was the result of a flawed process rife with conflicts of interest,” the money manager told other investors earlier this month.

Life insurance company stock prices have increased since the fall, and FBL shareholders ought to be able to get a better offer, Capital Returns Management said.

FBL said the process used to negotiate and evaluate the deal was rigorous and independent.

FBL has had weaker financial performance than other, comparable companies, and the performance of its stock might be much worse if Farm Bureau P&C were not offering to acquire it, the company said.

(Image: Diego M. Radzinschi/ALM)