The National Security Stock (NSEC): Why The Price Surged Up Today

By Amit Chowdhry ● Jan 27, 2022
  • The stock price of The National Security Group Inc (NASDAQ: NSEC) increased by 70% pre-market today. This is why it happened.

The stock price of The National Security Group Inc (NASDAQ: NSEC) increased by 70% pre-market today. Investors are responding positively to The National Security Group and VR Insurance Holdings announcing that they have entered into a definitive merger agreement, under which VR Holdings has agreed to acquire all of the outstanding common shares of The National Security Group for $16.35 per share in cash, representing a 77% premium to the closing share price as of January 25, 2022. The total transaction value is approximately $41.4 million, subject to certain provisions. 

VR Holdings is a newly formed Delaware company founded by Vivek Ranadivé. Mr. Ranadivé has been the Founder and Managing Director of Bow Capital Management LLC and its affiliated funds since 2016 and Chairman, Chief Executive Officer and Governor of the Sacramento Kings since 2013.

The company’s Board of Directors has unanimously approved the transaction and recommended that NSG’s shareholders vote in favor of the transaction. And the agreement requires approval by holders of the majority of NSG’s outstanding common shares. The acquisition is expected to close by the end of the second quarter of 2022, subject to customary closing conditions, including receipt of certain required regulatory approvals and approval of NSG’s shareholders. There are no financing conditions associated with the definitive merger agreement.

Following the closing, it is anticipated that VR Holdings will continue to leverage the existing operations and infrastructure of NSG’s wholly-owned property and casualty and life insurance subsidiaries. And the company’s current Chief Financial Officer Brian McLeod will serve as Chief Operating Officer of the company’s insurance subsidiaries and will also serve as VR Holdings’ Chief Financial Officer. 

NSG remains fully committed to policyholders and independent agent partners and expects no immediate changes in its day-to-day business operations. And upon completion of the transaction, NSG will become a private company with the flexibility and capital to accelerate its next stage of growth. McLeod will work closely with the management team including Ross Aron, CEO of VR Holdings, and the investor group to continue the company’s expansion.

KEY QUOTE:

“We believe this transaction is in the best interest of NSG’s shareholders and policyholders. By combining our 75-year history of stability, underwriting expertise and commitment to our policyholders with the financial resources of the investor group led by Mr. Ranadivé, we expect to realize greater opportunities for growth and an enhanced ability to serve our policyholders and agent partners.” Mr. Brunson also noted that shareholders will benefit from the significant premium to recent share prices.

— William L. Brunson, Jr., Chief Executive Officer of NSG

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.