Mercer to vote on merger with United Fire

Shareholders of Mercer Insurance Group will vote next month whether to approve merging the New Jersey-based company with United Fire & Casualty Co.

Mercer on Thursday filed documents with the U.S. Securities and Exchange Commission setting the shareholder vote for 10 a.m. March 16 at the company's Pennington, N.J., corporate headquarters. The Mercer board of directors voted unanimously to approve the merger agreement with United Fire and is recommending shareholder approval.

Under the terms of the $191 million merger, Mercer shareholders will receive $28.25 per share minus any withholding taxes, which represents a 49.8 percent premium to Mercer's $18.86 per share closing price Nov. 30 when the deal was announced.

The merger must still be approved by insurance regulators in California, New Jersey and Pennsylvania.

The combined company is expected to be a top 50 U.S. publicly traded property and casualty insurer, based on 2009 net written premiums, which consist of approximately 91 percent commercial insurance lines.

Approval of the transaction by United Fire shareholders is not required. The Cedar Rapids-based insurer expects to finance the acquisition with $100 million in available cash, $125 million from existing lines of credit and a loan from the Federal Home Loan Bank of Des Moines with a fixed interest rate of 3.6 percent for 20 years.

The combined 2009 net written premiums for Mercer and United Fire  were $605 million. There is no overlap between the two organizations' agency networks as Mercer Insurance primarily markets in six Western and Mid-Atlantic states in which United Fire has no appointed property casualty agencies, the companies said in a news release announcing the agreement.

United Fire President Randy Ramlo has said the insurer plans to no office closings are anticipated. Ramlo said United Fire plans to offer life insurance, bonding and other niche products in markets served by Mercer after the merger is completed.