Fidelity & Guaranty Life
Robbins Arroyo LLP: Acquisition of Fidelity & Guaranty Life (FGL) by Anbang Insurance Group Company Limited May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Fidelity & Guaranty Life (NYSE: FGL) by Anbang Insurance Group Company Limited. On November 9, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Anbang will acquire Fidelity. Under the terms of the agreement, Fidelity shareholders will receive $26.80 in cash for each share of Fidelity common stock.
Is the Proposed Acquisition Best for Fidelity and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Fidelity is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $26.80 merger consideration represents a premium of only 26.4% based on Fidelity’s one-week average closing price prior to Fidelity’s public announcement of its strategic review process on April 6, 2015. This premium is significantly below the average one-week premium of nearly 65% for comparable transactions within the past three years. Further, the $26.80 merger consideration is significantly below the target price of $30.00 set by analysts at both Macquarie on July 22, 2015, and Sandler O’Neill & Partners LP on October 8, 2015. In the last three years, Fidelity traded as high as $27.87 on October 23, 2015, and most recently traded above the merger consideration – at $26.83 – on November 2, 2015.
On August 5, 2015, Fidelity reported strong earnings results for its third quarter 2015. Net income for the quarter was $86 million, an increase of 51% compared to the same period last year. Average assets under management for the quarter were $18 billion, an increase of 8.3% compared to the same period last year. Additionally, Fidelity has beat consensus analyst estimates for sales in three out of its past four quarters. In commenting on these results, Fidelity President and Chief Executive Officer Chris Littlefield remarked, “Our business continues to grow with fixed indexed annuity sales, indexed universal life sales and assets under management all up significantly over last year. More importantly, we’re generating this growth while achieving our targeted spreads and new business profitability measures. While adjusted operating income is below our expectations due to lower SPIA mortality and increased costs associated with the strategic review process, the overall fundamentals of our business remain solid and we are well-positioned to continue to deliver value for our distribution partners, policy owners and shareholders.”
In light of these facts, Robbins Arroyo LLP is examining Fidelity’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Fidelity shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Fidelity shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.