United Fire to buy Mercer Insurance for $191 mln

(BestGrowthStock) – U.S. property & casualty insurer United Fire & Casualty Co (UFCS.O: ) said it will buy smaller rival Mercer Insurance Group (MIGP.O: ) for $191 million in cash, helping it to enter into the Mid-Atlantic and West Coast markets.

United Fire agreed to pay $28.25 a share, a 49.8 percent premium over Mercer’s closing price on Nov 30.

Mercer shares jumped 48 percent in pre-market trade on Nasdaq to $27.97, while United Fire’s shares rose 11 percent to $23.

“We anticipate it (the transaction) will contribute to our net income and return on equity no later than 2012,” United Fire Chief Executive Randy Ramlo said.

Cedar Rapids, Iowa-based United Fire, which said the deal would diversify its risk profile and increase its operational scale, expects the transaction to close by the end of the first quarter of 2011.

Mercer Insurance mainly markets in six Western and Mid-Atlantic states in which United Fire has no appointed property casualty agencies, the companies said in a statement.

At the closing of the transaction, United Fire will market through about 1,400 independent agents in 24 states,

(Reporting by Archana Shankar in Bangalore; Editing by Prem Udayabhanu)

United Fire to buy Mercer Insurance for $191 mln