SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of
the Securities Exchange Act of 1934
Meridian Insurance Group, Inc.
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(Name of Subject Company)
Meridian Insurance 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)
589644-10-3
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(CUSIP Number of Class of Securities)
Norma J. Oman
Chief Executive Officer
Meridian Insurance Group, Inc.
2955 North Meridian Street
Indianapolis, Indiana 46208-4788
(317) 931-7000
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(Name, address and telephone number of person authorized to receive notice and
communications on behalf of the person(s) filing statement)
with copies to:
Stephen J. Hackman
Ice Miller Donadio & Ryan
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
(317) 236-2100
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Meridian Insurance Group, Inc., an
Indiana corporation (the "Company" or "MIGI"). The address of the principal
executive office of MIGI is 2955 North Meridian Street, Indianapolis, Indiana
46208-4788. The title of the class of equity securities to which this Statement
relates is shares of common stock, no par value (including the associated
preferred stock purchase rights issued pursuant to the Rights Agreement dated as
of September 18, 1998 between the Company and Harris Trust and Savings Bank)
(collectively herein, the "Common Stock" or "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to a tender offer by American Union Financial
Corporation, an Illinois corporation that is 50% owned by Gregory M. Shepard
("AUFC"), to purchase up to 350,000 Shares (representing 4.82% of the Shares
outstanding as of March 5, 1999) at a purchase price no greater than $18.50 nor
less than $14.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated April 2, 1999
and the related Letter of Transmittal (which together constitute the "Offer").
If more than 350,000 Shares have been validly tendered at or below the purchase
price and not withdrawn on or prior to the Expiration Date (as defined in the
Offer), the purchase of Shares will be subject to proration.
The Offer states that the principal executive offices of AUFC are
located at 303 East Washington Street, Bloomington, Illinois 61701.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) None.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
At a special meeting of the Board of Directors of the Company (the
"Board") held on April 7, 1999, the Board considered the terms of the Offer. As
a result of the meeting the Board determined that the Company should remain
neutral toward the Offer.
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In reaching its position, the Board concluded that it could not
recommend that shareholders accept the Offer because it believed that the price
offered for the Shares is inadequate when viewed in light of recent market
prices for the Company's Shares (the Shares traded as high as $20.25 in February
1999) and when compared to the book value of the Shares ($19.60 as of December
31, 1998). Moreover, the Board was concerned about the impact that the Offer may
have on the liquidity of the Shares. In the Offer, AUFC has stated that the
Shares are being acquired for investment and that preference will be given to
tenders of Shares received from small shareholders. If the Offer is successful,
the number of Shares available for trading in the public market by persons other
than AUFC and Mr. Shepard, and the number of shareholders of the Company will be
reduced, adversely affecting the liquidity of the Company's Shares. The Company
believes that reduced liquidity in the Company's Shares may have a negative
effect on Share prices.
Notwithstanding the foregoing concerns, the Board determined that
vigorous opposition to the Offer was not warranted because (a) Mr. Shepard has
received approval from the insurance regulatory authorities in Indiana,
Minnesota and Ohio to acquire, directly or through affiliates like AUFC, up to
19.9% of the Company's outstanding Shares, (b) the acquisition by AUFC of the
Shares sought in the Offer will not affect the control of the Company, and (c)
the acquisition by AUFC of the Shares sought in the Offer will not have any
consequences to shareholders under the Company's Shareholder Rights Plan.
A letter to shareholders communicating the Board's position is attached
hereto as Exhibit A, and is incorporated herein by reference.
ITEM 5. PERSONS RETAINED EMPLOYED OR TO BE COMPENSATED
Neither the Company nor any person acting on its behalf has retained
any other person to make solicitations or recommendations to the Company's
shareholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except as set forth in this paragraph (a), no transactions in
Shares have been effectuated during the past 60 days by the Company, or, to the
best of the Company's knowledge, by any executive officer, director, affiliate
or subsidiary of the Company. On March 1, 1999, James H. Lyon, an executive
officer of Meridian Mutual Insurance Company, the Company's largest shareholder,
exercised for cash options to acquire 400 Shares at a price of $10.795 per
share. On March 3, 1999, each of the outside directors of the Company or
Meridian Mutual received a grant of the following number of Shares in partial
payment for his or her annual director's fee pursuant to the Company's outside
director compensation plan: Ramon L. Humke, 539 Shares; Harold C. McCarthy, 135
Shares; Joseph D. Barnette, Jr., John T. Hackett, Douglas W. Huemme, David M.
Kirr, Martha D. Lamkin, G. Benjamin Lantz, Jr., James D. Price, Sarah W.
Rowland, and Thomas H. Sams, 270 Shares each. On the same date, Norma J. Oman,
President and Chief Executive Officer and a director of the Company, surrendered
15,634 Shares to the Company in payment of the exercise price of options to
acquire 27,789 Shares at a price of $10.795 per share.
<PAGE>
(b) To the best of the Company's knowledge, none of its executive
officers or directors currently intends to tender to the bidder Shares held of
record or beneficially owned by such persons. Meridian Mutual Insurance Company,
the Company's largest shareholder, has advised the Company that it does not
intend to tender any of its Shares in response to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) No negotiation is being undertaken or is underway by the Company in
response to the Offer which relates to or would result in (1) an extraordinary
transaction such as a merger or reorganization, involving the Company or any
subsidiary of the Company; (2) a purchase, sale or transfer of a material amount
of assets by the Company or any subsidiary of the Company; (3) a tender offer
for or other acquisition of securities by or of the Company; or (4) any material
change in the present capitalization or dividend policy of the Company.
(b) Except as described in Item 4, there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Company has no additional information to provide that may be
necessary to make the required statements, not materially misleading, in light
of the circumstances under which they are made.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
(a) Except as listed in this paragraph (a), the Company has made no
written solicitation or recommendation which was published or sent or given to
security holders in connection with the solicitation or recommendation referred
to in Item 4.
A. Form of Letter to Shareholders of the Company dated April 14,
1999.
(b) No oral solicitation or recommendation to security holders is to be
made by or on behalf of the Company.
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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.
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<S> <C>
April 14, 1999 /s/ Norma J. Oman
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Date Norma J. Oman
President and Chief Executive Officer
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EXHIBIT A
April 14, 1999
Dear Shareholders,
I am writing to advise you of the position of Meridian Insurance Group,
Inc. (the "Company" or "MIGI") with respect to the recent tender offer by
American Union Financial Corporation, a corporation that is 50% owned by Gregory
M. Shepard ("AUFC"), for up to 350,000 shares of MIGI common stock (representing
4.82% of MIGI shares outstanding as of March 5, 1999) at a purchase price no
greater than $18.50 nor less than $14.50 per share, net to the seller in cash
(the "Offer"). The Board of Directors has met and considered the terms of the
Offer and has concluded that, for several reasons, the Company could not
recommend that shareholders accept the Offer.
We believe that the price offered for the shares is inadequate when
viewed in light of recent market prices for the shares, which have been as high
as $20.25 in February, and when compared to the book value of the shares, which
was $19.60 at December 31, 1998. We further believe that if the Offer is
successful, the number of shares available for trading in the public market by
persons other than AUFC and Mr. Shepard and the number of shareholders will be
reduced, adversely affecting the liquidity of the Company's shares. We believe
that reduced liquidity in the Company's shares may have a negative effect on
share prices.
The Board also concluded that it should not recommend that shareholders
reject the Offer because Mr. Shepard has obtained the required approvals from
the applicable insurance regulatory authorities to allow AUFC to acquire the
shares sought in the Offer, which will increase Mr. Shepard's direct and
indirect ownership to 19.9% of the Company's outstanding shares. Moreover, the
acquisition by AUFC of the shares sought in the Offer will not affect the
control of the Company and will not have any consequences to shareholders under
the Company's Shareholder Rights Plan.
For these reasons, the Board determined that the Company should remain
neutral toward the Offer. The enclosed Schedule 14D-9 contains important
information relating to the decision. We urge you to read it carefully.
We will keep you advised of any important future developments. In the
meantime, we appreciate your continued support and confidence.
Sincerely,
Norma J. Oman
President and Chief Executive Officer
