Biglari offers to acquire Michigan insurer in $51M deal

Cory Schouten
October 12, 2010
Back to TopCommentsE-mailPrintBookmark and Share

The parent company of Steak n Shake has raised its offer for a small Michigan insurer that spurned its advances late last year.

Biglari Holdings Inc. has offered to acquire the outstanding shares of Fremont Michigan Insuracorp Inc. for $29 per share in cash, a 41-percent premium to Monday's closing price. The deal values the property and casualty insurer at $51 million.

Biglari Holdings plans to take its offer to Fremont's board, which rejected a lower offer from Biglari in December 2009. A statement from the San Antonio-based company led by activist-investor-turned-CEO Sardar Biglari implores the board to come to the table to fulfill its "fiduciary duties" to shareholders and "reach a mutually satisfactory transaction."

The company has not revealed its plans for Fremont, but investment advisers say Biglari wants to use the firm's $60 million investment portfolio to fund more acquisitions, following in the footsteps of his investing hero, Warren Buffett. Buffett's Berkshire Hathaway acquired its first insurer in the 1960s and now funds billions of dollars in investments through the portfolios of its insurance companies.

Fremont rejected a bid for $24.50 per share last year, a premium of just 11.3 percent, describing the offer as a "hostile takeover attempt." At the time, the company said its own strategy represented "a better long-term value for shareholders."

The shares have steadily fallen since Fremont rejected the original offer, closing at $20.50 each on Monday. Fremont soared more than 36 percent in early trading Tuesday, with volume more than 85 times the stock's average. Biglari shares were trading down slightly, at $388 each.

Fremont, which provides insurance to individuals, farms and small businesses in Michigan, has not responded to the latest offer.

In October 2009, Steak n Shake disclosed that it had purchased a roughly 10-percent stake in Fremont shortly after Biglari said he intended to transform Steak n Shake into a holding company to pursue purchases “either related or unrelated to its ongoing business activities.”

Fremont has 1.77 million outstanding shares. Biglari would have to pay about $46 million for the shares it doesn't already own, by IBJ's calculation.

Biglari took over Indianapolis-based Steak n Shake Co. in a 2007 proxy fight, helped return its restaurants to profitability, then transformed it into a holding company for a diverse range of investments.

The renamed company, which relocated its headquarters to San Antonio, has moved aggressively to invest or take over other firms, including Advance Auto Parts and Sonic Corp. The Steak n Shake restaurant operations remain in Indianapolis.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............