Philly Deals: Harleysville Group shareholders vote to sell

Posted: April 26, 2012

Harleysville Group Inc. shareholders voted to accept $60 a share to sell the company to Nationwide Mutual Insurance Co., chief executive Michael L. Browne said in a statement Wednesday.

That price is a lot fatter than the stock’s previous high, in the mid-$30s. Half a dozen policyholders, who sued to change the terms, say some cash should go to the company’s nominal owners, policyholders of affiliated Harleysville Mutual Insurance Co., as happened in previous mutual sales like Nationwide’s purchase of the former Provident Mutual Life Insurance Co., Berwyn, 10 years ago (also after a court fight).

Last week, Philadelphia Common Pleas Judge Patricia McInerney declined to issue a preliminary injunction stopping the sale, but she agreed to consider setting aside $19 million Browne stands to make from the deal, along with payments to ex-Pennsylvania Gov. Bill Scranton and other Harleysville board members, while the lawsuits go on, Bloomberg reported.

There were two approval votes: With 90 percent turnout, 99.8 percent of Harleysville Group shareholders voted to take Nationwide’s share offer. Just 14 percent of Harleysville Mutual policyholders voted; of those, 87 percent supported the sale.

Browne says it’s enough for policyholders, and for Pennsylvania law, that Nationwide is a bigger, more profitable mutual than Harleysville, so policies should be better protected after the merger, and no additional cash is owed.

Harleysville’s primary regulator, the Pennsylvania Insurance Department, agrees and has approved the sale, on the condition that Nationwide keeps Harleysville workers on the job for the next few years. Nationwide made a similar pledge when it bought Provident Mutual a decade ago. The company employed more than 1,600 in Pennsylvania after the sale; it now employs about 1,300, spokeswoman Elizabeth Christopher Giannetti told me.

Harleysville expects the deal will close before June 30.

Fighting Amazon

Conshohocken-based Kynetic’s ShopRunner unit has bought three-year-old, Boston-based retail-pickup service PickupZone, to help its retail-chain clients compete with Amazon.com’s new Amazon Lockers service. ShopRunner boss Mike Golden said the combined firm will set up PickupPoints, a network of up to 30,000 store locations where shoppers can pick up clothes and other stuff they bought online.

Kynetic is the group of privately held businesses that GSI Commerce boss Michael Rubin kept when he sold the rest of his publicly traded company to eBay for $2.4 billion last year. Like GSI, “we are a collaborative partner to retailers, unlike those guys in Seattle [Amazon],” ShopRunner chief strategy officer FionaDias told me.

Amazon is growing rapidly, with new services like server farms that have taken business once handled by Wayne-based SunGard Availability and other data-backup centers, and Amazonsupply.com, which sells direct to businesses, using Amazon’s growing network of giant warehouses in Pennsylvania, Delaware, and eight other states. Old-time values

Bargains yes; recovery, no: Jim Jacobs, head of Jacobs Realty Group L.L.C., Wayne, sent me sale data for three small business-property deals just closed in the western suburbs — a medical office, a warehouse cluster, a restaurant — and compared today’s prices with earlier, peak sale values.

In Bryn Mawr, 1201 County Line Rd., a 9,200-square-foot medical office building, was bought by 26 Montrose Associates (the group includes one of the prior owners) for $1.2 million, about what comparable properties sold for way back in 2003.

In Exton, 891, 713 and 821 E. Lincoln Highway, three “flex” office/warehouse buildings totaling 22,200 square feet on 12 acres that need “remediation,” were sold by CDS Investment Co. to 891 E. Lincoln Associates for $925,000, about what they were worth in 1995.

And in Spring House, 900 N. Bethlehem Pike, the 10,000-square-foot ex-Drafting House restaurant, was sold by DRI Real Estate Holdings to Kefelonia Partners L.P for $1.1 million, less than the $1.4 million the property brought in 1995, before a $400,000 renovation.

Contact columnist Joseph N. DiStefano at 215-854-5194, J oeD@phillynews.com, or @PhillyJoeD on Twitter.

|
|
|
|
|