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Exhibit (a)(1)(Z)
To: BUSINESS WIRE AMY LYNCH
Fax #: 312-573-0019 Ph. #: 888-292-4446
Date: December 8, 2000
Contact: Mr. Gregory M. Shepard
Chairman and President
American Union Insurance Company
Phone: (309) 827-5968
AMERICAN UNION INSURANCE COMPANY WITHDRAWS TENDER OFFER FOR 50.1% OF THE
OUTSTANDING SHARES OF COMMON STOCK OF MERIDIAN INSURANCE GROUP AND FILES MOTION
REQUESTING PRELIMINARY INJUNCTION OF MERGER TRANSACTION BETWEEN MERIDIAN
INSURANCE GROUP AND A WHOLLY OWNED SUBSIDIARY OF STATE AUTOMOBILE MUTUAL
INSURANCE COMPANY.
Effective immediately, American Union Insurance Company, Meridian Insurance
Group Acquisition Corporation, Gregory M. Shepard, and Tracy M. Shepard (the
?Offerors?) are withdrawing their offer to purchase 50.1% of the outstanding
common stock of Meridian Insurance Group for $25 per share which was scheduled
to expire on December 15, 2000. All shares tendered in response to the offer and
not previously returned shall be promptly returned to their respective owners.
The offer is being withdrawn because the Offerors are unable to structure a
transaction comparable to the proposed merger transaction between Meridian
Insurance Group and MIGI Acquisition Corp., which has as a participant, MIGI
Acquisition Corp.?s parent, State Automobile Mutual Insurance Company. To comply
with applicable law, the Offerors would be required to make a tender offer for
all of the outstanding shares of Meridian Insurance Group, whereas, under the
Merger Agreement with MIGI Acquisition Corp. and State Automobile Mutual, only
the shares owned by the public shareholders of Meridian Insurance Group are
being acquired for cash.
On Friday, December 8, 2000, Gregory M. Shepard, the owner of approximately
twenty percent of the outstanding common stock of Meridian Insurance Group,
filed an amended complaint and a Motion for Preliminary Injunction to Enjoin
Merger Between Meridian Insurance Group, Inc. and MIGI Acquisition Corp. in the
United States District Court for the Southern District of Indiana, Indianapolis
Division. MIGI Acquisition Corp. is a wholly owned subsidiary of State
Automobile Mutual Insurance Company. Shepard is requesting that the Court enter
a preliminary injunction enjoining the defendants Meridian Insurance Group and
Meridian Insurance Group?s directors, Ramon L. Humke, Norma J. Oman, Joseph D.
Barnette, Jr., Thomas H. Sams, James D. Price, Sarah W. Rowland, David M. Kirr
and John T. Hackett, from proceeding with and/or
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consummating the proposed merger transaction between Meridian Insurance Group
and MIGI Acquisition Corp.
The motion asserts that, in agreeing to the merger agreement between Meridian
Insurance Group and MIGI Acquisition Corp., the defendants breached the
fiduciary duties they owed to Meridian Insurance Group?s shareholders. The
motion further alleges that the defendants did not act in good faith, did not
act with the care an ordinarily prudent person in a like position would exercise
under similar circumstances, did not act pursuant to an informed judgment, did
not take action in the good faith exercise of their business judgment after a
reasonable investigation, and did not act in a manner which they could
reasonably believe to be in the best interests of Meridian Insurance Group and
its shareholders because, among other things, once having decided to approve and
recommend the sale of Meridian Insurance Group, the individual defendants did
not act in a manner reasonably calculated to enhance the price which Meridian
Insurance Group?s shareholders would receive. The motion alleges that, instead,
defendants acted in a manner calculated to frustrate the efforts of the Offerors
to acquire Meridian Insurance Group and to advance the individual defendants?
personal interests by entrenching the positions of certain senior management.
The motion contains the following additional allegations. First, that the
defendants represented on October 5, 2000 that the management of Meridian
Insurance Group had been directed to explore strategic alternatives to enhance
shareholder value such as repurchasing the outstanding Meridian Insurance Group
shares, engaging in a corporate reorganization or restructuring, taking Meridian
Insurance Group private, demutualizing Meridian Insurance Group?s mutual
insurance company affiliates, or engaging in an affiliation or business
combination, but no such exploration was undertaken. Instead, on October 6,
2000, only one day later, Meridian Insurance Group entered into a
confidentiality agreement with a single potential acquiror, State Automobile
Mutual Insurance Company, and only nineteen days later Meridian Insurance Group
entered into the merger agreement with State Automobile Mutual Insurance
Company. Second, that the defendants represented on October 5, 2000 that the
management of Meridian Insurance Group expected to enter into discussions and/or
negotiations with third parties regarding one or more of the alternatives to
enhance shareholder value. Instead, on October 6, 2000, only one day later,
Meridian Insurance Group entered into a confidentiality agreement with a single
potential acquiror, State Automobile Mutual Insurance Company, and only nineteen
days later Meridian Insurance Group entered into the merger agreement with State
Automobile Mutual Insurance Company. Third, that the defendants stated on
October 5, 2000 that they had no interest in engaging in any transaction with
American Union Insurance Company, Gregory M. Shepard or any of their affiliates.
Lastly, that the merger agreement entered into by Meridian Insurance Group and
MIGI Acquisition Corp. includes an unreasonable break-up fee and a no
solicitation provision intended to discourage other parties from making a
superior acquisition proposal, each of which is to the detriment of Meridian
Insurance Group?s shareholders.
American Union Insurance Company is a Bloomington, Illinois based property and
casualty insurance company originally chartered in 1916 by L.F. Shepard as Union
Automobile Insurance Association. The present name was adopted in 1998. Today
50% of American Union?s common stock is owned by Gregory M. Shepard and 50% by
Tracy M. Shepard, who are brothers. Meridian Insurance Group Acquisition
Corporation is a wholly owned subsidiary of American Union Insurance Company.
