Argonaut Takeover Deal Is Latest Crash Casualty

A merger agreement was terminated Tuesday by Argonaut Group, an insurance holding company, and the investment firm of Gibbons, Green, van Amerongen. The Oct. 4 leveraged buyout deal, valued then at $620 million, became another merger casualty related to the October stock market crash.

Argonaut also said its board has authorized management to buy up to 2 million of the company’s 11.7 million shares outstanding.

In a joint announcement Tuesday, the companies said they could not agree on changes sought by Gibbons Green in “certain aspects” of the agreement that were not specified. However, Roy Little, vice president and treasurer, said they did not include a proposed price change.

Under the Oct. 4 agreement, Gibbons Green was to pay $53 a share for the Los Angeles insurance firm. Payment was to be $45 cash and a share of a new preferred stock valued at $8.

Since the Oct. 19 market crash, Argonaut’s stock has been trading sharply lower in the over-the-counter market. It closed Tuesday at $30.50, down from $35.25 Monday after the announcement.

Results Anticipated

The “radical changes” in the financial markets since the merger agreement was signed required significant changes in the financing, Tuesday’s announcement said. It added that last week Gibbons Green, which has offices in New York and Los Angeles, notified Argonaut that it had obtained financing commitments “in amounts sufficient to complete the transaction.” However, Gibbons Green was unwilling to proceed without agreement on changes in the agreement, and the parties could not agree, they said.

Argonaut said that the inability to complete the merger was “not caused by any change in its financial condition or business prospects.” It added that it expects “substantially improved” results for fiscal 1987. In the first half, it reported net profit of $41.3 million, up from $17.1 million for the like period of 1986.

Argonaut said Tuesday that it will buy its own stock in the open market or in negotiated transactions from time to time, depending on market conditions.

An independent company only since October, 1986, Argonaut formerly was a subsidiary of Teledyne. Argonaut has two operating subsidiaries: Argonaut Insurance Co., Menlo Park, Calif., specializing in workers’ compensation insurance, and Great Central Insurance Co., Peoria, Ill., a property-casualty insurer.