Why American Safety Insurance Shares Skyrocketed
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of American Safety Holdings finished up 21% today after Farifax Financial agreed to buy it out for $306 million, or $29.25 a share.
So what: Shares traded as high as $28.99 today but closed at $28.91, more than 1% below the buyout price. Fairfax, a subsidiary of Canadian Insurer Prem Watsa, plans to sell American Safety's reinsurance unit for $59 million to Tower Group International , which gained 2.4% on the day. The deal will give Watsa $480 million to invest, and the company has a track record of growing through acquisitions. American Safety expects the transaction to close in the fourth quarter.
Now what: American Safety's board unanimously approved the purchase, so there don't appear to be any serious obstacles that would undo the deal. The acquisition certainly looks like a win for American Safety shareholders as shares, which had already hit an all-time high two months ago, soared 13% above that mark on the news. To follow American Safety as the deal proceeds toward closing, just add the company to your Watchlist here.
The article Why American Safety Insurance Shares Skyrocketed originally appeared on Fool.com.Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.