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UPDATE 1-Privately held reinsurer to buy Tower Group for $172 mln

Monday, 6 Jan 2014 | 8:47 AM ET

Jan 6 (Reuters) - Tower Group International Ltd said it would be bought by ACP Re Ltd, a privately owned reinsurance company, for $172 million.

ACP Re offered $3 in cash for each Tower Group share, a premium of 2.4 percent to the stock's Friday closing. Tower Group's shares were trading at $2.96 before the bell on Monday.

Tower's shares fell about 82 percent last year as the company repeatedly delayed filing second-quarter results and tripled its expected loss reserves.

The company said in October it was reviewing strategic options and that it would cut about 10 percent of its workforce.

Bermuda-based ACP Re is controlled by a trust established by the founder of AmTrust Financial Services Inc, National General Holdings Corp and Maiden Holdings Ltd .

Tower Group Chief Executive Michael Lee, who owns 4.2 percent of the company, has agreed to vote in favor of the merger.

In a separate press release, AmTrust Financial Services Inc said it would buy renewal rights and assets of the commercial lines insurance operations of Tower for about $125 million.

The transaction is expected to close by the summer of 2014. J.P. Morgan Securities was the lead adviser to Tower, while Guggenheim Securities LLC advised AmTrust.

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