Fidelity and Deposit Co. of Maryland and Mountbatten Inc. late yesterday announced a merger agreement in which shareholders of Bala Cynwyd, Pa.-based Mountbatten will receive $14.60 a share in cash to become part of Baltimore-based F&D.;
Since Mountbatten has about 2.53 million shares outstanding, the deal would have a value of about $36.9 million. That's about a 3 percent premium to its market value of $36.03 million at the close of trading yesterday.
That's also less than is often seen in friendly takeovers. But Mountbatten shares are up 62 percent in 12 months, according to Bloomberg News. The shares closed unchanged at $14.25 yesterday, though only 2,200 shares traded hands.
In a statement, the companies said Mountbatten managers in control of 24 percent of the outstanding shares of the company had agreed to vote in favor of the F&D; acquisition.
Part of Zurich Group
F&D;, part of the Zurich Group, is one of the nation's leading writers of surety bonds -- securities purchased to ensure performance, such as with a contractor on a construction project. Mountbatten sells surety products to customers in 18 states.
"This merger will produce a powerful surety company with the ability to compete successfully across the spectrum of the surety marketplace," Mountbatten Chairman Kenneth L. Brier said in a statement.
The companies expect to complete the merger in this year's third quarter.
Afterward, Mountbatten will continue to operate separately and is planning to expand its business until it has a presence in all 50 states, the companies said.
Mountbatten has steadily increased both its premiums received and net income earned in the past five years. Premiums rose from $1.4 million in 1993 to $8.25 million last year. Net income rose from $320,000 to $1.56 million during the same period.
F&D; is a group of bonding and insurance companies with 32 offices in the United States.
Service is provided by 5,200 independent insurance agents and brokers.
Officials from neither company were available last night to comment on the proposed deal.
Pub Date: 5/07/98