<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 19, 1997
-----------------
__________
ALLMERICA PROPERTY & CASUALTY COMPANIES, INC.
-------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-20668 04-3164595
-------- ------- ----------
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction I.D. Number)
of Incorporation)
__________
440 Lincoln Street, Worcester, Massachusetts 01653
-------------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
(508) 855-1000
------------------------------------------------
Registrant's Telephone Number, including area code
Page 1 of 6 pages
Exhibit Index on page 6
<PAGE>
Item 5. Other Events
On February 19, 1997, Allmerica Property & Casualty Companies, Inc.
("Allmerica P&C"), APY Acquisition, Inc., a wholly owned subsidiary of AFC
("Merger Sub") and Allmerica Financial Corporation ("AFC") entered into an
Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which AFC
will acquire all of the outstanding shares of Common Stock, $1.00 par value, of
Allmerica P&C (the "Allmerica P&C Common Stock") that AFC and its subsidiaries
do not currently own. Pursuant to the terms of the Merger Agreement, Merger Sub
will merge with and into Allmerica P&C (the "Merger"), resulting in Allmerica
P&C becoming a wholly owned subsidiary of AFC. Each outstanding share of
Allmerica P&C Common Stock other than shares owned by AFC or its subsidiaries or
by persons who properly perfect their appraisal rights under the Delaware
General Corporation Law, will be converted into the right to receive, at the
election of the holder, one of the following (collectively, the "Merger
Consideration"):
(i) (x) 0.4 (the "Standard Exchange Ratio") of a share of the Common
Stock, $.01 par value of AFC ("AFC Common Stock") and (y) an amount in
cash, without interest, equal to $17.60 (the "Standard Cash
Consideration"); provided, however, that (1) in the event the average
closing price of AFC Common Stock for the ten consecutive trading days
ending on the fifth trading day prior to the effective date of the Merger
(the "Average Stock Price") is less than $36.00, the Standard Cash
Consideration shall be equal to (A) $32.00 less (B) the Standard Exchange
Ratio multiplied by the Average Stock Price and (2) in the event the
Average Stock Price is greater than $41.00, the Standard Cash
Consideration shall be equal to (A) $34.00 less (B) the Standard
Exchange Ratio multiplied by the Average Stock Price (collectively, the
"Standard Consideration"); or
(ii) 0.85714 (the "Stock Exchange Ratio") of a share of AFC Common Stock (the
"Stock Consideration"); provided, however, that (1) in the event the
Average Stock Price is less than $36.00, the Stock Exchange Ratio
shall be equal to $32.00 divided by the Average Stock Price and (2) that
in the event the Average Stock Price is greater than $41.00, the
Stock Exchange Ratio shall be equal to $34.00 divided by the Average
Stock Price; or
(iii) cash, without interest, in an amount equal to $33.00 (the "Cash
Consideration"); provided, however, that (1) in the event the Average
Stock Price is less than $36.00, the Cash Consideration shall be
equal to $32.00 and (2) in the event the Average Stock Price is more than
$41.00, the Cash Consideration shall be equal to $34.00.
The maximum number of shares of AFC Common Stock to be issued in the Merger is
approximately 9.67 million shares. The form of payment of the Merger
Consideration will be prorated in the event the Cash Consideration or the Stock
Consideration is over subscribed.
Immediately prior to the consummation of the Merger, the Certificate of
Incorporation of Allmerica P&C will be amended to authorize a Class B Common
Stock of Allmerica P&C, $5.00 par value (the "Class B Common Stock").
Immediately prior to the consummation of the Merger, each share of Allmerica P&C
Common Stock owned by AFC and its subsidiaries will be exchanged for one share
of Class B Common Stock (the "Recapitalization").
SMA Financial Corp. ("SMA"), a wholly owned subsidiary of AFC, is the holder
of 59.5% of the outstanding shares of Allmerica P&C Common Stock. AFC will
cause SMA to execute, as a stockholder of Allmerica P&C, a written consent of
shareholders (a) adopting the Merger Agreement and approving the Merger and (b)
approving the amendment to the certificate of incorporation of the Company to
authorize the issuance of the Class B Common Stock pursuant to the
Recapitalization.
The respective obligation of each party to the Merger Agreement to effect the
Merger is subject to the fulfillment of various conditions, including (i) that
all necessary approvals from insurance regulatory authorities and other
governmental authorities shall have been obtained, (ii) that the Form S-4 filed
to register the AFC Common Stock to be issued in connection with the Merger
shall have been declared effective by the Securities and Exchange Commission and
that such shares shall have been approved for listing on the New York Stock
Exchange (the "NYSE") and (iii) that the Recapitalization
-2-
<PAGE>
shall have been completed. Additionally, (i) the obligation of Allmerica P&C to
effect the Merger is subject to fulfillment of the conditions (a) that each of
AFC and Merger Sub shall have performed in all material respects its agreements
contained in the Merger Agreement and that the representations and warranties of
each contained therein shall have remained true and correct as of the effective
time of the Merger and (b) that the Special Committee of the Board of Directors
of Allmerica P&C (the "Special Committee") shall have received a fairness
opinion from Salomon Brothers Inc to the effect that the Merger Consideration is
fair, from a financial point of view, to the holders of Allmerica P&C Common
Stock (other than AFC and its subsidiaries) and such fairness opinion shall not
have been withdrawn and (ii) the obligation of AFC to effect the Merger is
subject to fulfillment of the conditions (a) that Allmerica P&C shall have
performed in all material respects its agreements contained in the Merger
Agreement and that the representations and warranties of Allmerica P&C contained
therein shall have remained true and correct as of the effective time of the
Merger and (b) that AFC shall have received a fairness opinion from Merrill
Lynch, Pierce, Fenner & Smith Incorporated to the effect that the Merger is
fair, from a financial point of view, to AFC and such fairness opinion shall not
have been withdrawn.
The Merger Agreement may be terminated and the Merger may be abandoned (i) by
the mutual consent of AFC, Merger Sub and, with the consent of the Special
Committee, Allmerica P&C, at any time prior to the Effective Time, (ii) by
action of the Board of Directors of either AFC or, with the consent of the
Special Committee, Allmerica P&C if (a) the Merger shall not have been
consummated by September 30, 1997, or (b) a United States federal or state court
of competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable
or (c) insurance regulatory authorities shall have issued an order or ruling or
taken other action denying approval of the transactions contemplated by this
Agreement, and such order, ruling or other action shall have become final and
nonappealable, (iii) by action of the Board of Directors of Allmerica P&C (with
the consent of the Special Committee) if, prior to the Effective Time, (a) the
Board of Directors of Allmerica P&C determines in good faith, upon advice of
counsel, that notwithstanding a binding commitment to consummate the Merger
pursuant to the Merger Agreement entered into in the proper exercise of their
fiduciary duties, failure to terminate the Merger Agreement would likely be a
breach of such fiduciary duties by reason of an alternative proposal with
respect to Allmerica P&C being made, (b) there has been a material breach of any
of the covenants or agreements set forth in the Merger Agreement on the part of
AFC or (c) the Board of Directors of the Purchaser shall have withdrawn or
modified in a manner materially adverse to the Company its approval or
recommendation of the Merger Agreement or the Merger, (iv) by the Special
Committee on behalf of Allmerica P&C at any time prior to the Effective Time if
the Special Committee withdraws or materially modifies or changes its
recommendation of the Merger Agreement or the Merger and the Special Committee
determines in good faith, upon advice of counsel, that notwithstanding a binding
commitment to consummate the Merger pursuant to the Merger Agreement entered
into in the proper exercise of their fiduciary duties, failure to terminate the
Merger Agreement would likely be a breach of such fiduciary duties by reason of
an alternative proposal with respect to Allmerica P&C being made or (v) by
action of the Board of Directors of AFC, at any time prior to the Effective Time
if (a) the Board of Directors of Allmerica P&C and the Special Committee shall
have withdrawn or modified in a manner materially adverse to AFC its approval or
recommendation of the Merger Agreement or the Merger, or (b) there has been a
breach by Allmerica P&C of any representation or warranty contained in the
Merger Agreement which would have or would be reasonably likely to have a
material adverse effect on Allmerica P&C or (c) there has been a material
breach of any of the covenants or agreements set forth in the Merger Agreement
on the part of Allmerica P&C.
The foregoing summary description of the terms of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, which is
incorporated by reference as Exhibit 1 hereto. A copy of the joint press
release of AFC and Allmerica P&C announcing the Merger Agreement is attached
hereto as Exhibit 2 and is incorporated by reference herein.
-3-
<PAGE>
Item 7. Financial Statements and Exhibits
Exhibit 1* Agreement and Plan of Merger dated February 19, 1997 among AFC,
Allmerica P&C and Merger Sub.
Exhibit 2 Joint press release of AFC and Allmerica P&C dated February 19,
1997 announcing the Merger Agreement.
*Incorporated by reference to Exhibit 1 to the Current Report on Form 8-K of
Allmerica Financial Corporation (Commission File Number 1-13754) dated
February 19, 1997.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ALLMERICA PROPERTY & CASUALTY COMPANIES, INC.
By: /s/ John F. Kelly
-----------------------------------
Title: Vice President
Date: February 19, 1997
-5-
<PAGE>
Exhibit Index Page
- ------------- ----
Exhibit 2 Joint press release of AFC and Allmerica P&C dated
February 19, 1997 announcing the Merger Agreement. 7
-6-
<PAGE>
EXHIBIT 2
ALLMERICA FINANCIAL CORPORATION,
ALLMERICA PROPERTY & CASUALTY COMPANIES, INC.
ANNOUNCE DEFINITIVE MERGER AGREEMENT
Worcester, Mass., February 19, 1997 -- Allmerica Financial Corporation
(NYSE:AFC) and Allmerica Property & Casualty Companies, Inc. (NYSE:APY)
announced the signing of a definitive merger agreement in which Allmerica
Financial will acquire the 40.5% of Allmerica P&C, or 24.2 million shares, that
it is does not already own, for approximately $800 million, or $33.00 per share.
"Allmerica P&C is vital to our success, and remains central to our core
strategy of offering clients a range of financial security and insurance
protection products," said John F. O'Brien, chief executive officer at Allmerica
Financial Corporation. "This combination allows Allmerica Financial to
allocate capital more flexibly among operations, and will enable us to further
focus attention on enhancing long-term shareholder value."
Under the terms of the transaction, shareholders of Allmerica P&C will have the
right to receive $17.60 in cash and 0.40 shares of Allmerica Financial common
stock in exchange for each share of Allmerica P&C. However, if Allmerica
Financial's 10-day average closing stock price prior to the consummation of the
merger falls below $36.00 per share or increases above $41.00 per share, the
cash component of the merger consideration will be adjusted so that the value
received by Allmerica P&C shareholders in the exchange is no less than $32.00
per share and no greater than $34.00 per share. Additionally, in lieu of
receiving the specified combination of cash and stock, shareholders of Allmerica
P&C may elect to receive consideration either entirely in the form of cash or
entirely in common shares of Allmerica Financial. However, these elections will
be limited by aggregate amounts of Allmerica Financial common stock and cash
issuable in the merger. An aggregate of approximately 9.67 million shares of
Allmerica Financial common stock will be issued to Allmerica P&C shareholders in
the merger transaction.
Consummation of the merger is subject to customary terms and conditions,
including review by insurance regulators and the Securities and Exchange
Commission, and is expected to be completed by the third quarter of 1997.
Allmerica Financial Corporation, headquartered in Worcester, Mass., is the
holding company for a diversified group of insurance and financial services
companies with total assets of $19 billion. Allmerica Financial markets
insurance and retirement savings products, as well as group benefit programs, to
individual and institutional clients. Through Allmerica P&C, Allmerica
Financial offers property and casualty insurance products nationally through an
independent agent network.
Allmerica P&C is among the top 30 property and casualty insurers in the United
States, based on net written premium. Allmerica P&C is regionally-focused in
the Northeast and Michigan, and operates through two primary subsidiaries, The
Hanover Insurance Company and Citizens Corporation (NYSE: CZC).
CONTACTS
Investors Media
- --------- -----
Jean Peters Michael F. Buckley
Vice President, Investor Relations Director, Public Information
(508) 855-3599 (508) 855-3099
