Shares of Protective Insurance Corporation (NASDAQ:PTVCA)(NASDAQ: PTVCB) surged this morning after Progressive Corporation (NYSE:PGR), one of the largest car insurers in the U.S., announced its plans to acquire the company.
Protective Insurance Corporation Class A shares had jumped close to 41% as of midmorning, while Protective Insurance Corporation Class B shares had climbed as much as 53% at one point this morning.
Progressive agreed to acquire all outstanding shares of Protective Insurance Corporation, an insurer for fleet trucking, independent contractors, and fleet workers' compensation, for $338 million in cash, the equivalent of $23.30 per share.
The acquisition price represents a 49.1% premium over Protective's class A shares and a 63.2% premium over its class B shares, based on a 30-day volume-weighted average as of Feb. 12.
Karen Bailo, the commercial lines president at Progressive, said the move will allow Progressive to expand its insurance offerings in existing and new lines of business.
"This move allows us to add products that will help us support larger fleets and brings expertise in workers' compensation coverage for the transportation industry, which are new areas of business for us and can help us to meet the needs of our commercial customers," Bailo said in a statement.
The acquisition is expected to close before the end of the third quarter of this year. Shares of Progressive traded lower as of 11 a.m. this morning, which can often happen to acquiring companies on the day a transaction is announced.