Insurance Firm in Proxy Fight Put Up for Sale
American General Corp., embroiled in a bitter proxy battle with Torchmark Corp. for control of the huge Houston-based insurance company, said today that it is putting itself up for sale.
In a surprise announcement at the annual shareholders’ meeting, Chairman Harold S. Hook said that American General is vulnerable to possible acquisitions at a discount price and that it decided to offer itself for sale to realize the maximum value for stockholders.
Hook said that if the company isn’t sold in one piece, the board of directors is prepared to sell off assets.
By late morning on the New York Stock Exchange, American General was off 12.5 cents to $40 a share. Torchmark was up 87.5 cents to $44.50 a share on the NYSE.
The decision to sell the company was made late Tuesday, according to Hook, on the eve of today’s crucial proxy vote in which Torchmark is seeking to elect its own slate of directors to the board.
Hook said the company couldn’t announce its decision to sell the company until today when shareholders cast their ballots.
“We are confident we elected our slate of directors,” Hook said to the shareholders’ applause. “I wish that was the end of the story.”
Torchmark has been waging a proxy fight to elect five nominees to the 15-member board since it withdrew an unsolicited $6.34-billion cash and stock offer for American General.
Torchmark Chairman Ron Richey said he had no immediate comment on the announced sale. “It’s a lot to digest,” he said.
American General officials had vigorously urged shareholders to vote for the company’s own slate of directors. It had also resisted efforts by Torchmark to hire an investment bank and appoint a panel of independent directors to evaluate acquisition proposals.
The outcome of today’s proxy vote won’t be known for up to two weeks before the final tally is announced because every proxy must be counted by hand, American General spokesman John Pluhowski said.
Houston-based American General, with subsidiaries that operate in 50 states and Canada, is battling with the much smaller Birmingham, Ala.-based Torchmark, which is best known for its Liberty National Mutual Insurance subsidiary.
American General has assets of $32 billion. Torchmark, with assets of $5 billion, has set aside $15 million for the proxy fight.
A federal judge in Tennessee allowed Torchmark to continue its proxy fight Tuesday, one day after a state commissioner ordered an end to the battle. Today a federal appeals court upheld that decision.
