On May 30, 2018, Wolf Popper filed a lawsuit against AmTrust Financial Services, Inc. (“AmtTrust”) in the Delaware Court of Chancery, on behalf of Arca Capital Group (“Arca”), a private equity group with offices in the Czech Republic and the Slovak Republic that owns over 4.8 million AmTrust shares. The lawsuit seeks to obtain certain of AmTrust’s corporate books and records. On March 1, 2018, AmTrust, an insurance holding company, announced that it had entered into a merger agreement whereby its controlling stockholder family will acquire the company’s unaffiliated stock for $13.50 per share. Arca believes that the $13.50 merger price offered to minority stockholders is inadequate, and that the controlling family is attempting to purchase AmTrust at a steep discount. In this lawsuit, Arca seeks, among other things, internal financial documents concerning the fair value of AmTrust stock, as well as material shedding light on certain conflicts of interest maintained by the AmTrust directors who were tasked with negotiating the merger for the benefit of minority stockholders.
The AmTrust merger has been under close scrutiny as of late. Activist investor and AmTrust stockholder Carl Icahn has echoed Arca’s contention that the merger is an attempt by the controlling stockholder family to enrich itself at the expense of public investors. Institutional Shareholder Services, Inc. has also criticized the deal, and has recommended that AmTrust stockholders vote against it.
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