Please ensure Javascript is enabled for purposes of website accessibility

Why National Interstate Corporation Shares Skyrocketed

By Sean Williams - Feb 5, 2014 at 3:12PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

National Interstate becomes a bullseye for a rival. Should shareholders be content with this buyout offer or be looking for more?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of National Interstate (NASDAQ: NATL), a specialty property and casualty insurer in the U.S. and Cayman Islands, soared as much as 32% after receiving a tender offer from American Financial Group (AFG -1.80%) subsidiary Great American Insurance Company.

So what: According to the press release from American Financial Group, its subsidiary has offered to purchase National Interstate for $28 in cash per share, without interest, representing a 26% premium above yesterday's closing price. The tender offer is set to expire on March 6, unless the offer is extended beyond that date or terminated early. National Interstate has not made any comments as of yet as to its take on the tender offer.

Now what: Just the simple fact that shares are currently trading at approximately $1 per share above the offer price is an indication from investors that they expect either a competing bid to emerge or for American Financial Group to raise its price. Playing the tender offer game certainly isn't something I recommend, because there's no guarantee a competing bid will emerge or, in this case, that American Financial Group's subsidiary will even keep its bid on the table. Following three hefty quarterly EPS misses in a row, I believe National Interstate shareholders should be fairly content with this offer.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

American Financial Group, Inc. Stock Quote
American Financial Group, Inc.
AFG
$135.10 (-1.80%) $-2.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
397%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.