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Exhibit (a)(1)(Q)
PRESS RELEASE
To: BUSINESS WIRE AMY LYNCH
Fax#: 312-573-0019 Ph.#: 888-
292-4446
PRESS RELEASE (#1) September 18, 2000
Contact: M. Gregory M. Shepard
Chairman and President
American Union Insurance Company
Phone: (309) 827-5968
AMERICAN UNION INSURANCE COMPANY ANNOUNCES INCREASE IN CASH TENDER OFFER TO
$25 PER SHARE, REDUCTION OF THE PERCENTAGE SOUGHT TO 50.1% OF THE OUTSTANDING
SHARES OF COMMON STOCK OF MERIDIAN INSURANCE GROUP, INC. AND ELIMINATION OF
FINANCING CONTINGENCY
Today, Monday, September 18, 2000, American Union Insurance Company,
through Gregory M. Shepard, its Chairman and President, issued a letter to the
Board of Directors of Meridian Insurance Group, Inc. increasing its cash
tender offer to $25 per share and reducing the percentage sought to 50.1% of
the outstanding shares of common stock of Meridian Insurance Group, Inc.
American Union also eliminated the financing contingency from its offer.
The contents of the letter are as follows:
September 18, 2000
VIA FACSIMILE AND U.S.
EXPRESS MAIL
Board of Directors
Meridian Insurance Group, Inc.
2955 North Meridian Street
Indianapolis, Indiana 46206-1980
Ladies and Gentlemen:
This is to inform you that American Union Insurance Company ("American
Union") is revising its tender offer to $25 per share cash and reducing the
percentage sought to 50.1% of the common shares of Meridian Insurance Group,
Inc. (the "Company"). The offer for 50.1% is calculated on a fully-diluted
basis, and includes the 1,588,400 common shares owned by Gregory Mark Shepard
("Shepard"). In addition, American Union is eliminating the financing
contingency from its offer. The tender offer is extended to October 20, 2000
at 5:00 p.m. New York City time.
The revised Offer is now conditioned upon, among other things, (1) there
being validly tendered and not properly withdrawn prior to the expiration of
the Offer a number of common shares which, together with common shares owned
by Shepard, American Union and Meridian Insurance Group Acquisition
Corporation, a wholly owned subsidiary of American Union ("Purchaser"),
constitute at least 50.1% of the voting securities of the Company outstanding
or issuable under the Company's stock option plan, (2) the Company's
redemption of its preferred share purchase rights, and (3) American Union,
Shepard and Purchaser having obtained all insurance regulatory approvals
necessary for their acquisition of control of the Company and its insurance
subsidiaries and affiliates on terms and conditions reasonably satisfactory to
the purchaser.
The revised offer addresses the concerns raised by you in the Company's
filing with the Securities and Exchange Commission. I call upon you to let
stockholders decide for themselves whether they wish to take advantage of a
very significant premium for their shares right now. I hope that you, as
fiduciaries, will recognize that our revised offer is very much in the best
interest of stockholders and that you will act accordingly.
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Sincerely,
Gregory Mark Shepard
Chairman and President
American Union Insurance Company
cc: Commissioner, Indiana Department of Insurance
Commissioner, Minnesota Department of Insurance
Director, Ohio Insurance Department
Director, Illinois Insurance Department
On September 11, 2000, Meridian Insurance Group, Inc. filed a Schedule 14
D-9 with the Securities and Exchange Commission which stated that Meridian's
Board of Directors recommended that the company's shareholders not accept the
American Union offer. The Board gave three principal reasons for its
recommendation, which have been addressed by the revised offer announced
today.
The Board first stated that the offer price is inadequate and does not
reflect the inherent value of the company. By increasing the amount offered
per share by 25 percent, American Union believes that it has more than
adequately responded to the Meridian Board's concern as to price. The revised
offer price represents a 97% premium over the market price of Meridian's
common stock prior to the announcement of American Union's offer.
Second, the Board of Meridian stated that it had relied on the opinion of
A. G. Edwards & Sons, Inc. that the American Union offer price was inadequate
from a financial point of view as of September 8, 2000. American Union
believes that by increasing the offer price by 25 percent, it has addressed
any concerns raised by the A. G. Edwards opinion. American Union also points
out that the A. G. Edwards opinion was wholly conclusory, did not give the
reasoning or financial analysis behind its opinion, and did not indicate what,
in its opinion, would be an adequate offering price.
Third, the Board of Meridian stated that since the American Union offer was
subject to certain conditions that, in the Board's opinion, will not be
satisfied, the offer will not succeed. The Board pointed to four conditions:
a) the requirement of a 50.1% share tender; b) the financing contingency; c)
the requirement that Meridian's "poison pill" preferred share purchase rights
be redeemed by Meridian; and d) the need for insurance regulatory approval.
American Union believes that its revised offer addresses the concerns of
the Meridian Board regarding the satisfaction of these conditions.
First, American Union believes that if the stockholders are given the
opportunity to decide for themselves whether they will take advantage of the
very significant premium being offered to them by American Union, the 50.1%
tender condition will be satisfied.
Second, by eliminating the financing contingency, American Union has
completely removed this issue from its offer. American Union has the ability
to finance the revised offer.
Third, satisfaction of the condition regarding the redemption of the poison
pill preferred share purchase rights is within the power of the Meridian Board
of Directors. American Union believes that is wholly disingenuous for the
Meridian Board to give this condition as a reason for opposing the American
Union offer as the Board can eliminate this condition simply by redeeming the
rights and allowing the stockholders to make their own choice about whether to
tender their shares.
Finally, American Union has no reason to believe that it will not obtain
regulatory approvals. Previously, Mr. Shepard has obtained the approval of the
Indiana Insurance Commissioner to purchase approximately 20 percent of
Meridian's common stock. The only basis given by the Meridian Board for its
statement that regulatory approval is unlikely is the involvement of Mr.
Shepard with another company which failed. The Board does not state that it
has been advised by any regulator that it would be reluctant to grant
approval. In other words, the Board's statement in this regard is pure
speculation.
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The other reasons given by the Meridian Board for opposing the offer
largely duplicate what it said previously in its first three reasons, and,
therefore, do not, in American Union's opinion, require a detailed response.
The offer and its withdrawal rights will expire at 5:00 P.M., New York City
time, on October 20, 2000, unless the offer is extended. The offer is being
made through a wholly owned subsidiary of American Union.
The Depositary and Information Agent for the offer is ChaseMellon
Shareholder Services, L.L.C., 44 Wall Street, 7th Floor, New York, New York,
10005, Call Toll-Free (888) 451-6741.
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.
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