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Gibbons Green to Buy Argonaut for $620 Million

October 06, 1987|BRUCE KEPPEL | Times Staff Writer

Argonaut Group, a Los Angeles holding company whose principal business is in workers' compensation insurance, said Monday that it has agreed to be bought for $620 million by the investment firm of Gibbons, Green, van Amerongen.

Stockholders for Argonaut, whose stock trades in the national over-the-counter market, would receive $45 cash for each share of common stock plus one share of new preferred stock valued at $8 a share in a corporation to be formed by Gibbons Green and merged with Argonaut.

Argonaut stock closed Monday at $48 a share, up 50 cents.

Earlier Offer Failed

"No changes in management, marketing or operations are expected to result from the merger," Argonaut President D. W. Schrempf said in a statement. "We feel that it is very favorable to our shareholders."

Argonaut, formerly a subsidiary of Teledyne, became an independent company only last October. In April, Clarendon Group, a privately owned insurance company based in Bermuda, offered $37 a share for the company but raised its offer to $52 (about $600 million) last July. Negotiations collapsed last month, however, after disagreement on final terms.

"We are proud of the substantial increase in value achieved since the company became independent last October," Schrempf said.

Gibbons Green said it has initiated more than $2 billion in similar leveraged buyouts over the last two years. These include the $550-million acquisition of Bath Iron Works, a shipbuilder in Maine, from Congoleum, and the $520-million purchase of Budget Rent-a-Car Corp. from Transamerica--both announced in August, 1986.

A spokesman for Gibbons Green, which has offices in both New York and Los Angeles, said many of Argonaut's managerial staff will be given the opportunity to invest in the acquisition.

Argonaut Group is headquartered in Los Angeles but has two operating subsidiaries: Argonaut Insurance Co., which largely specializes in workers' compensation insurance and is based in Menlo Park, Calif., and Great Central Insurance Co., a property-casualty insurer with headquarters in Peoria, Ill.

In the first half of 1987, Argonaut reported a profit of $41.3 million, up from $17.1 million for the same period of 1986. Like many casualty insurers, it reportedly lost money in 1985 as a Teledyne subsidiary.

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