West Virginia-based Summit Financial Group, Inc. has agreed to acquire Kelly Insurance Agency, Inc. and Kelly Property and Casualty Inc. headquartered in Leesburg, Virginia for $6.2 million in stock.
The acquisition of the Kelly Agencies will serve to expand significantly Summit’s insurance services business, as it represents a more than five-fold increase in revenue for this business segment of Summit.
The Kelly Agencies, founded in 1967, have 18 producers and combined revenues of $4 million; approximately 70 percent of this revenue is derived from the sale of group health, life and disability insurance plans to more than 900 business clients.
Under the terms of the agreement, Summit will pay $6.2 million for the outstanding common stock of the Kelly Agencies, subject to adjustment based on the Kelly Agencies’ working capital as of the closing date. If, at closing, the Kelly Agencies’ working capital is less than $135,000, then the deal’s aggregate consideration will be decreased dollar-for-dollar. If the Kelly Agencies’ working capital at closing exceeds $135,000, then the deal’s aggregate consideration will be increased dollar-for-dollar.
The final transaction consideration will be paid 100% in the form of Summit common stock. The exchange ratio for determining the number of shares of Summit common stock to be issued for each share of Kelly Agencies’ common stock will be based on the average closing price of Summit’s common stock for the five trading days before the closing date of the transaction. The Kelly Insurance Agencies’ shareholders will receive shares of Summit’s common stock based on an exchange ratio equal to the final per share transaction consideration divided by Summit’s Average Closing Stock Price.
Summit expects this transaction will be $0.02 to $0.03 dilutive to its second half 2007 earnings per share, neutral to its 2008 earnings per share, and accretive to its 2009 earnings per share.
The acquisition is expected to be completed in the third quarter of 2007. Immediately following the transaction, Summit intends to merge the Kelly Agencies into its existing wholly owned insurance agency, Summit Insurance Services, LLC, but the Kelly Agencies will continue to operate under the “Kelly” name. All present principals and producing agents of the Kelly Agencies will continue as members of the Summit Insurance Services team following the acquisition.
Summit Financial Group, Inc., a financial holding company with total assets of $1.25 billion, operates 15 banking locations through its two wholly-owned community banks: Summit Community Bank, headquartered in Moorefield, West Virginia; and Shenandoah Valley National Bank in Winchester, Virginia. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia.
Source:
The Summit Financial Group, Inc.
www.summitfgl.com
Topics Mergers & Acquisitions Agencies Virginia West Virginia
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