Nationwide Settles Harleysville Merger Suit

Nationwide Mutual Insurance Co. announced on Oct. 11 that it has agreed to settle litigation related to the merger with Harleysville Mutual Insurance Co.

The $26 million settlement relates to In re Harleysville Mutual, a consolidated class action and derivative suit related to the merger of Columbus, Ohio-headquartered Nationwide Mutual and Harleysville, Penn.-based Harleysville Mutual that has been brought on behalf of former Harleysville Mutual policyholders.

The $834 million merger was completed last May, and Harleysville is now part of the Nationwide family of companies.

Financial terms of the deal had come under attack by some Harleysville Mutual policyholders as well as by some other third-party observers such as David Schiff, editor of Schiff’s Insurance Observer and an advocate of mutual policyholders. Critics argued that Nationwide offered a significant premium for common stock of Harleysville Group, a publicly traded subsidiary of Harleysville Mutual — which critics contend enriched stockholders including top executives at Harleysville Mutual. But, the critics also noted, the merger didn’t provide for any consideration to the mutual policyholders of Harleysville Mutual beyond the fact that they would become members of Nationwide.

The suit and settlement were filed in the Court of Common Pleas of Philadelphia.

Nationwide pointed out that the settlement is not an admission of wrongdoing or liability by Nationwide or Harleysville. The court has not ruled on the merits of the suit, and is not expected to do so in the course of the settlement-related proceedings. The settlement will not be final until it is approved by the court and any appeals from the court’s ruling are resolved.

Topics Lawsuits Mergers & Acquisitions