ELBA, Ala. & SAN FRANCISCO–(BUSINESS WIRE)–The National Security Group and VR Insurance Holdings today announced that they have entered into a definitive merger agreement, under which VR Holdings has agreed to acquire all of the outstanding common shares of The National Security Group for $16.35 per share in cash, representing a 77% premium to the closing share price as of January, 25, 2022. Total transaction value is approximately $41.4 million, subject to certain provisions. VR Holdings is a newly formed Delaware company founded by Vivek Ranadivé. Mr. Ranadivé has been the Founder and Managing Director of Bow Capital Management LLC and its affiliated funds since 2016 and Chairman, Chief Executive Officer and Governor of the Sacramento Kings since 2013.
“We believe this transaction is in the best interest of NSG’s shareholders and policyholders,” said William L. Brunson, Jr., Chief Executive Officer of NSG. He said, “By combining our 75-year history of stability, underwriting expertise and commitment to our policyholders with the financial resources of the investor group led by Mr. Ranadivé, we expect to realize greater opportunities for growth and an enhanced ability to serve our policyholders and agent partners.” Mr. Brunson also noted that shareholders will benefit from the significant premium to recent share prices.
The Company’s Board of Directors has unanimously approved the transaction and recommended that NSG’s shareholders vote in favor of the transaction. The agreement requires approval by holders of the majority of NSG’s outstanding common shares. The acquisition is expected to close by the end of the second quarter of 2022, subject to customary closing conditions, including receipt of certain required regulatory approvals and approval of NSG’s shareholders. There are no financing conditions associated with the definitive merger agreement.
Following closing, it is anticipated that VR Holdings will continue to leverage the existing operations and infrastructure of NSG’s wholly owned property and casualty and life insurance subsidiaries. The Company’s current Chief Financial Officer, Brian McLeod, will serve as Chief Operating Officer of the Company’s insurance subsidiaries and will also serve as VR Holdings’ Chief Financial Officer. NSG remains fully committed to its policyholders and its independent agent partners and expects no immediate changes in its day-to-day business operations. Upon completion of the transaction, NSG will become a private company with the flexibility and capital to accelerate its next stage of growth. Mr. McLeod will work closely with the management team including Ross Aron, CEO of VR Holdings, and the investor group to continue the Company’s expansion.
[1] The price per share is subject to downward adjustment if the combined statutory capital and surplus of NSG’s insurance subsidiaries is less than $43 million; VR Holdings can terminate the agreement if combined statutory capital and surplus falls below $38.7 million. The insurance subsidiaries are expected to exceed the $43 million threshold in their statutory financial statements as of December 31, 2021.
Transaction Advisors
Piper Sandler & Co. is acting as financial advisor to NSG, and Burr & Forman, LLP is serving as the Company’s legal advisor. For Mr. Ranadivé and VR Holdings, Morris, Manning & Martin, LLP served as legal advisor, while DHG serves as accounting advisors and Balch & Bingham serves as Alabama regulatory counsel.
About The National Security Group, Inc.
The National Security Group, Inc. (NASDAQ:NSEC), through its property & casualty and life insurance subsidiaries, is a specialty underwriter of property, casualty, life, accident and health insurance in ten states. The Company writes primarily personal lines property coverage including dwelling fire and windstorm, homeowners, and mobile homeowners’ products. The Company also offers life, accident and health, supplemental hospital and cancer insurance products. The Company was founded in 1947 and is based in Elba, Alabama. Additional information about the Company, including additional details of recent financial results, can be found on our website: www.nationalsecuritygroup.com.
About Vivek Ranadivé
Mr. Ranadivé has been the Founder and Managing Director of Bow Capital Management LLC and its affiliated funds since 2016 and Chairman, Chief Executive Officer and Governor of the Sacramento Kings since 2013. He founded his first company, Teknekron Software Systems, Inc. (“Teknekron”), in 1986 to develop and apply software to financial trading floors. After selling Teknekron to Reuters PLC in 1994, he then went on to found and spin-out TIBCO as a separate company in 1997. TIBCO completed its initial public offering in 1999 and was subsequently sold to Vista Equity Partners in 2014 for $4.3 billion. As Chairman and Chief Executive Officer, Mr. Ranadivé built TIBCO into a leading provider of middleware software that became the central data nervous system for many of the world’s largest companies and government agencies. Mr. Ranadivé became involved in NBA basketball first as Vice Chairman of the Golden State Warriors. Mr. Ranadivé holds a B.S. and M.A. degree in Electrical Engineering from the Massachusetts Institute of Technology and an MBA from Harvard Business School where he graduated as a Baker Scholar.
About VR Holdings, Inc.
VR Holdings is a newly formed Delaware company founded by Vivek Ranadivé and a group of family office and strategic investors. VR Holdings has been formed to serve as the holding company for NSG and potentially other insurance and financial services businesses.
