Unitrin OKs Repurchase of Outstanding Common Stock
Unitrin Inc. said Friday its board has authorized the insurance company to repurchase up to 19.3% of its outstanding common stock, in a defense against American General Corp.'s unfriendly $2.6-billion takeover bid.
The Chicago-based company said it may repurchase up to 10 million of its 51.8 million common shares outstanding, using general corporate funds or bank loans.
The authorization will provide Unitrin shareholders more liquidity in light of the unsettled market conditions that followed American General’s unsolicited offer, the company said.
It also said its stock is undervalued, and that the expanded repurchase program will tend to increase the value of the shares that remain outstanding.
Unitrin said none of its directors plan to sell shares during the repurchase program. They own about 23% of the company’s common stock, including unexercised options.
On Wednesday, Unitrin’s largest shareholder, Dr. Henry Singleton, said he was opposed to American General’s bid, which the company had rejected last month. Unitrin has also adopted a stockholder rights plan to frustrate the bid.
Singleton, a company director, owns roughly 14% of Unitrin stock.
Fayez Sarofim, another director who opposes the American General bid, beneficially owns about 7% of the company, Unitrin said. About 60% of Sarofim’s shares are held on behalf of clients of his investment advisory firm. He does not personally exercise his right to vote or dispose of such shares, it said.
Unitrin said its board may consider other steps to further enhance stockholder value.
Unitrin said any merger or combination with a stockholder or its affiliates with stakes exceeding 15% in the company requires approval by a majority of its directors or a favorable vote of at least 75% of the company’s outstanding stock.