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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
SCHEDULE 14D-9
(Amendment No. 2)
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
__________
ALLIED Group, Inc.
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(Name of Subject Company)
ALLIED Group, Inc.
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(Name of Person(s) Filing Statement)
Common Stock, No Par Value
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(Title of Class of Securities)
019220102
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(CUSIP Number of Class of Securities)
__________
GEORGE OLESON, ESQ.
Vice President and Corporate Counsel
ALLIED Group, Inc.
701 Fifth Avenue
Des Moines, Iowa 50391-2000
(515) 280-4211
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(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person(s) filing)
With a copy to:
STEVEN OSTNER, ESQ.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
(212) 909-6000
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This amendment ("Amendment No. 2") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 as from time to time
amended (the "Schedule 14D-9") filed with the Securities and Exchange Commission
(the "Commission") on June 2, 1998 by ALLIED Group, Inc., an Iowa corporation
(the "Company"), with respect to the tender offer by Nationwide Mutual Insurance
Company, an Ohio corporation ("Nationwide"), and Nationwide Group Acquisition
Corporation, an Ohio corporation and wholly owned subsidiary of Nationwide
("Nationwide Sub" and, collectively with Nationwide, the "Bidder"), disclosed in
a tender offer statement on Schedule 14D-1, filed with the Commission on May 19,
1998 (as the same may be amended from time to time, the "Schedule 14D-1"), to
purchase up to 30,634,052 shares (the "Shares"), upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated May 19, 1998 (the
"Offer to Purchase"), and the related Letter of Transmittal (which collectively
constitute the "Initial Offer" and, as amended, the "Offer"). Capitalized terms
used herein without separate definition are used with the meanings specified in
this Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The section of Item 8 of the Schedule 14D-9 entitled "Pending Litigation" is
amended by adding as a new paragraph at the end thereof the following:
On July 16, 1998, a hearing was held before the Iowa District Court in and
for Polk County, Iowa, with respect to the motion of Mary M. Rieff for temporary
and permanent injunctive relief. On July 17, 1998, the Iowa District Court in
and for Polk County, Iowa, ordered that the plaintiff's motion for temporary and
permanent injunctive relief be denied. A copy of this ruling is filed as
Exhibit 41 hereto and is incorporated herein by reference. A copy of the
Company's press release announcing the Court's decision is attached as Exhibit
42 hereto and is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 41 Ruling of the Iowa District Court in and for Polk County,
Iowa, in Rieff v. John E. Evans, et al., dated July 17, 1998.
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Exhibit 42 Press release of ALLIED Group, Inc., dated July 17, 1998.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: July 20, 1998
ALLIED GROUP, INC.
By: /s/ Sally J. Malloy
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Name: Sally J. Malloy
Title: Corporate Secretary
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Index to Exhibits
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EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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41 -- Ruling of the Iowa District Court in and for Polk County,
Iowa, in Rieff v. John E. Evans, et al., dated July 17, 1998.
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42 -- Press release of ALLIED Group, Inc., dated July 17, 1998.
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EXHIBIT 41
IN THE IOWA DISTRICT COURT FOR POLK COUNTY
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:
MARY M. RIEFF, :
:
Plaintiff, :
:
- v - :
:
JOHN E. EVANS, ET AL, :
:
Defendants, : No. CE 35780
:
and : RULING
:
ALLIED MUTUAL INSURANCE COMPANY, :
:
Nominal Defendant in the :
Derivative Action Only, :
:
and :
:
NATIONWIDE MUTUAL INSURANCE :
COMPANY, :
:
Intervening Defendant, :
:
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On this 16th day of July, 1998 this matter came before the Court to
consider the Plaintiff's Motion For Temporary Injunction. Hearing was held,
with the Plaintiff appearing by counsel Brad J. Brady, Jason B. Adkins and
Albert; with the Defendant Allied Group, Inc. appearing by counsel Glenn L.
Smith and J. William Koegel, Jr.; with the individual-named director Defendants
appearing by counsel David
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L. Brown, John McClintock and Bruce W. Foudree; with the Nominal Defendant
Allied Mutual Insurance Company appearing by counsel Kent M. Forney and Jay
Eaton; and Intervening Defendant Nationwide Mutual Insurance Company appearing
by counsel Harold N. Schneebeck and Michael A. Reiter. The Court, having
reviewed the files, the document and evidence submitted, and heard the
statements of counsel, enters the following Ruling:
PROCEDURAL BACKGROUND
On December 31, 1997 Plaintiff Mary M. Rieff (Rieff), a policyholder
of Allied Mutual Insurance Company (Allied Mutual), filed a four-count
derivative action. The named Defendants are Allied Group, Inc. (Allied Group)
and present and former Directors of Allied Mutual. The Suit seeks monetary
damages arising out of a series of transactions that took place between 1985 and
1993 between Allied Mutual and Allied Group. On April 15, 1998 the Court
granted Plaintiff's Motion For Extension of Time To Serve Defendants. Plaintiff
was given until June 1, 1998 to complete Service of Process. On June 1, 1998
the Plaintiff filed a Motion For Temporary and Permanent Injunctive Relief. One
June 4, 1998 the Plaintiff filed her first Amended Petition. The Amended
Petition names the same Defendants. It contains eight counts and again is based
on transactions which took place between 1985 and 1993 between Allied Mutual and
Allied Group. Five of the counts are brought by Plaintiff in her derivative
capacity, and three are brought as a class action. On June 12, 1998 the
Plaintiff filed her Amended Motion For Temporary and Permanent Injunction. She
seeks to "...bar the six Allied Mutual
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directors or its officers from considering, negotiating, or approving or acting
on any transaction or on behalf of Allied Mutual, with Nationwide, or any other
mergers or acquisitions affecting Allied Mutual and its policyholders, until
further order of this Court;" and "make interim relief consistent with Rowen by
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unwinding the preferred stock sale and current transfer to Nationwide of voting
rights in Allied Group, and any other action the Allied Mutual directors or
officers have purported to take to effectuate the merger or any other related
transaction, including all actions taken without regulatory and policyholder
approval; and remove the directors, appoint interim directors and a special
master to supervise new elections, and grant such other relief as is appropriate
or schedule an additional expedited hearing to consider this relief."
On June 11, 1998 Nationwide Mutual Insurance Company (Nationwide)
intervened in this action.
On June 24, 1998 all defendants filed Motions to Dismiss.
FACTS
Rieff is a policyholder of Allied Mutual. She alleges the Board of
Directors of Allied Mutual have such a conflict of interest that they should be
prohibited from acting on any merger and that the court should act by
"unwinding" the action taken with respect to the merger with Nationwide.
The action has been on file since December 31, 1997. The proposed
merger of Allied Mutual with Nationwide prompted the filing of the Motion for
Injunctive Relief by the Plaintiff. On May 18, 1998 Nationwide publicly
announced its
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proposal to merge with Allied Mutual. On June 3, 1998, Nationwide entered into
three separate agreements to acquire the business of Allied Mutual, Allied Group
and Allied Life Financial Corporation (Allied Life).
The Nationwide-Allied Mutual Merger
On June 3, 1998 Nationwide and Allied Mutual entered into a written
Agreement and Plan of Merger (the Allied Mutual Agreement). Pursuant to the
terms and conditions of the Allied Mutual Agreement, Nationwide and Allied
Mutual agreed to merge Allied Mutual into Nationwide in accordance with the
applicable provisions of Iowa Code Sections 521.12 and 521A.3 and the laws of
the State of Ohio.
The Boards of Directors of both Nationwide and Allied Mutual approved
the merger and the Allied Mutual Agreement and deemed the merger advisable and
in the best interests of their respective policyholders. The merger and the
Allied Mutual Agreement are subject to approval by the requisite number of votes
of policyholders of both Nationwide and Allied Mutual, as well as the approval
of the Iowa Commission of Insurance, the Iowa Attorney General and the Ohio
Superintendent of Insurance. The Iowa Commissioner of Insurance has scheduled a
hearing for July 29, 1998. The issues at the hearing will be "whether the
interests of policyholders of Allied are properly protected: and if any
reasonable objection to the application exists."
As a result of the merger of Allied Mutual into Nationwide, the
policyholders of Allied Mutual will received a cash payment of $110 million as
an extraordinary dividend. Subject to the approval of the policyholders of
Nationwide and
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Allied Mutual, and subject to the approval of the Iowa and Ohio Departments of
Insurance, so long as such policyholder's policy constitutes an obligation of
Nationwide or another company with Nationwide or a Nationwide Insurer the
policyholder will participate in any demutualization or extraordinary
transaction involving Nationwide on the same basis and in the same manner as
Nationwide policyholder holding a similar policy. In addition, each such
policyholder will have the same voting rights within Nationwide as if his or her
policy were issued by Nationwide.
The merger will enable Nationwide to sell insurance in the western
part of the United States through Allied Mutual independent distribution
network. Prior to the merger, Nationwide sold most of its insurance in the
eastern part of the United States through a distribution network or captive
agents.
Nationwide's Acquisition of Allied Group
On June 3, 1998, Nationwide, Nationwide Group Acquisition Corporation,
a wholly-owned subsidiary of Nationwide (Nationwide Group Acquisition), and
Allied Group entered into an Agreement and Plan of Merger (the Allied Group
Agreement) pursuant to which Nationwide Group Acquisition will acquire all
Allied Group's outstanding stock for $48.25 per share for a total of
approximately $1.5 billion. After this acquisition, Nationwide Group Acquisition
will merge into Allied Group. As a result of the merger, Allied Group will
become a subsidiary of Nationwide. The $48.25 per share offer price is a 69%
premium over the price at which Allied Group shares were trading on
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the open market immediately prior to the announcement of the tender offer for
Allied Group's shares.
Allied Group's Board of Directors approved the Allied Group Agreement,
specifically determining that the $48.25 per share offer price is fair and in
the best interests of its shareholders. The Allied Group Board has resolved to
recommend Nationwide's $48.25 per share offer and the merger to its
shareholders.
The Boards of Directors of Nationwide and Nationwide Group Acquisition
have also approved the merger of Nationwide Acquisition with Allied Group.
Nationwide's acquisition of Allied Group is subject to the approval of the Iowa,
Ohio and Arizona Departments of Insurance.
Nationwide's Acquisition of Allied Life
As of June 3, 1998, Nationwide, Nationwide Life Acquisition
Corporation, a subsidiary of Nationwide (Nationwide Life Acquisition), and
Allied Life Financial Corporation (Allied Life) entered into a written Agreement
and Plan of Merger (the Allied Life Agreement). Pursuant to the Allied Life
Agreement and subject to conditions contained there, Nationwide Life has
commenced a tender offer to buy all of the outstanding shares of common stock of
Allied Life at $30 per share. This offer totals approximately $96 million for
approximately 4.6 million publicly held shares of Allied Life. Pursuant to the
Allied Life Agreement, after the purchase of those shares, Nationwide Life
Acquisition will merge with Allied Life and Allied Life will be surviving
corporation.
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The Board of Directors of Allied Life approved this offer and merger,
recommended that holders of the common stock of Allied Life accept the offer,
and determined that the terms of the offer are fair to and in the best interests
of its shareholders. Nationwide's acquisition of Allied Life is subject to the
approval of the Iowa and Ohio Departments of Insurance.
Since the summer of 1997, Nationwide has spent in excess of $1 million
in legal fees, printing fees, investment advisor and public relations fees and
costs related to these acquisitions. In addition, Nationwide executives and
employees have expended hundreds of hours of time in connection with them.
Substantial publicity has surrounded the proposed merger. No other
offers have been made to be considered by Allied Mutual. A letter was sent to
the Board of Directors of Allied Mutual on July 2, 1998 by David Schiff. Mr.
Schiff identifies himself as a "journalist, a candidate for Allied Mutual's
board, and a policyholder of Allied Mutual. The letter is nothing more than a
suggestion of a plan for sale to the highest bidder. No bidder has been
identified or come forward.
No evidence has been presented that the proposed merger is not in the
best interest of the policyholders nor has the merger been acted on by the
policyholders or the Iowa Insurance Commissioner.
CONCLUSIONS OF LAW
Iowa Rule of Civil Procedure 320 states:
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INDEPENDENT OR AUXILIARY REMEDY
An injunction may be obtained as an independent remedy by an action in
equity, or as an auxiliary remedy in any action. In either case, the party
applying therefor may claim damages or other relief in the same action. An
injunction may be granted as part of the judgment; or may be granted by
order at any prior stage of the proceedings, and is then known as a
temporary injunction.
Because the Plaintiff seeks an injunction prior to final judgment on
the merits of her lawsuit the injunction she seeks is temporary. Iowa Rule of
Civil Procedure 321 provides:
A temporary injunction may be allowed:
(a) When the petition, supported by affidavit, shows the plaintiff is
entitled to relief which includes restraining the commission or continuance
of some act which would greatly or irreparably injure him, or,
(b) Where, during the litigation, it appears that a party is doing,
procuring or suffering to be done, or threatens or is about to do, an act
violating the other party's right respecting the subject of the action and
tending to make the judgment ineffectual,
"[I]njunctive relief is an extraordinary remedy, to be granted with
caution and only when clearly required. Rokusek v. Jensen, 548 N.W.2d 570, 573
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(Iowa 1996). The issuance of a temporary injunction is a "drastic remedy" to be
used only to prevent irresparable injury and protect the subject of litigation
prior to final judgment. Kleman v. Charles City Police Dep't., 373 N.W.2d 90,
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94 (Iowa 1985); Kent Prods. v. Hoegh, 61 N.W.2d 711, 716 (Iowa 1953). A
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temporary injunction may be granted only if "an illegal act is threatened and
remedy at law is inadequate." Stellingwerf v. Lenihan, 85 N.W.2d 912, 914 (Iowa
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1957).
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The potential injuries alleged by Plaintiff are not irreparable and
are outside the category of non-compensable injuries threatened in cases where
Iowa courts have awarded temporary injunctions.
Plaintiff claims that she will be "irreparably harmed" in the absence
of immediate injunctive relief because the Defendant directors have been "making
significant expenditures of Allied Mutual's resources in negotiating and
purporting to approve and act in part to effectuate the merger and other related
transactions." She adds a list of other injuries which is a summary of the
injuries alleged in her First Amended Petition seeking damages.
The court cannot see how the potential injuries to Allied Mutual would
be "irreparable" even if the Plaintiff could prove her allegations. Plaintiff
has an adequate remedy at law for each of the injuries she alleges in the First
Amended Petition. Any such injuries to Allied Mutual or its policyholders would
be compensable through money damages and do not require immediate injunctive
relief to protect Plaintiff's opportunity to recover those damages.
Nor do the injuries alleged threaten the source of any recovery by
Plaintiff. The merger does not adversely affect the financial condition of any
of the Defendants. If, after the merger, Plaintiff is able to maintain any
cognizable claim it will be against the Defendants who are at least as capable
as they are presently of payment of these monetary claims. Any recovery against
Allied Group will be collectable against its successor. The
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policyholders the Plaintiff brings this action for will receive $110 million if
the merger is completed.
Plaintiff's failure to state how any potential injuries to Allied
Mutual or its policyholders are irreparable or non-compensable through money
damages is alone grounds for denial of her motion for temporary injunctive
relief. Because Plaintiff has an adequate legal remedy in the form of money
damages and the source of potential compensation is not threatened, there is no
basis for the temporary injunction requested by the Plaintiff. See
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Stellingwerf, 85 N.W.2d at 914.
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The Plaintiff also has asked for the effective removal of the Allied
Mutual board of directors and the appointment of a "special master" to act for
the company.
Iowa Rule of Civil Procedure 207 provides: A "master" includes a referee,
auditor or examiner. On a showing of exceptional conditions requiring it,
the court may appoint a master as to any issues not to be tried to a jury.
The clerk shall forthwith furnish the master with a copy of the order
appointing him.
The master referred to in the Rule typically acts to make additional factual
findings. See Rowan v. LeMars Mutual, 282 N.W.2d 639 (Iowa 1979). Here since
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the court has concluded that the Plaintiff on behalf of Allied Mutual can be
adequately compensated by an award of money damages the drastic remedy of
removal of the directors is not warranted.
Because the Court concludes that the Plaintiff has an adequate remedy
at law, no discussion of the allegations of conflict of interest and the
ultimate likelihood of Plaintiff being successful with her lawsuit is needed.
Likewise it is not necessary to
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address the fact that the policyholders and the Insurance Commissioner have yet
to pass on the merits of the merger.
IT IS THEREFORE ORDERED that the Motion for Temporary and Permanent
Injunctive Relief is denied.
July 17, 1998.
/s/ Larry J. Eisenhauer
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LARRY J. EISENHAUER, JUDGE
Judge of the Fifth Judicial District
Copies to:
Counsel of Record
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EXHIBIT 42
[ALLIED Group New Release Header Graphic]
For further information contact:
Joele Frank / Dan Katcher
Abernathy MacGregor Frank
(212) 371-5999
ALLIED GROUP, INC. RECEIVES FAVORABLE COURT RULING
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DES MOINES, JULY 17, 1998 -- Allied Group, Inc. (NYSE: GRP) announced it
received a favorable ruling today in Iowa District Court for Polk County in the
litigation Rieff vs. Evans, et. al. The Court ruled it will not grant
plaintiff's motion to stop the proposed merger of Allied Mutual Insurance
Company with Nationwide Mutual Insurance Company.
"We are pleased with the Court ruling. We believe that ALLIED Mutual's Board of
Directors acted appropriately in negotiating a merger agreement with Nationwide
that the Board believes is in the best interest of policyholders," said Douglas
Andersen, President and Chief Executive Officer of ALLIED Group, Inc., adding
"our merger process is moving forward and we look forward to ALLIED Mutual's
Special Meeting of Policyholders scheduled to be held on July 28, 1998 and to
the public hearing scheduled to be held on July 29, 1998 before the Iowa
Commissioner of Insurance and the Attorney General."
In permitting the merger to proceed, the Court stated no evidence was presented
that the proposed merger is not in the best interest of ALLIED Mutual's
policyholders.
ALLIED Group, Inc. is a regional property casualty insurance holding company
specializing in personal lines. The Company's property-casualty subsidiaries
use independent agencies, exclusive agencies, and direct response marketing to
offer products in central and western states.
