Rockhill Buying RTW for $67 Million

Specialty insurer Rockhill Holding Company is acquiring Minneapolis-based RTW Inc. in a $67.6 million deal, it was announced today by the two carriers.

Rockhill, in Kansas City, Mo., will acquire all outstanding shares of RTW stock for $12.45 per share in cash. After the merger, RTW, which offers workers' compensation insurance and services, will continue to operate as a separate wholly owned subsidiary of Rockhill, the firms said.

The proposed transaction, the companies said, has been unanimously approved by the boards of both companies and is subject to customary closing conditions, regulatory reviews and approvals, and approval by the shareholders of RTW.

The transaction is not subject to financing conditions and the firms said they expect the transaction to close on or before Dec. 31.

"We believe we are putting RTW and its customers in very good hands," commented RTW Chairman John O. Goodwyne. "We are pleased that Rockhill will pay RTW shareholders a price per share that we believe is good value and provide immediate liquidity in a very thinly traded stock.

He said the price of $12.45 represents a premium of 54 percent over the Nasdaq market price of Sept. 20, and is at a price higher than RTW stock has traded for at least the past five years.

Mr. Goodyne noted that it has been a difficult market for small public companies. "We believe this transaction provides significant immediate shareholder value while enabling RTW to continue to provide quality service to its customers," he said.

Jeffrey B. Murphy, RTW president and CEO, said as an independent company, RTW has built strong operating insurance companies in American Compensation Insurance Company and Bloomington Compensation Insurance Company and added service growth through RTW's Absentia division.

Terry Younghanz, Rockhill president and CEO, said the company has been searching "for an organization that mirrors our specialty underwriting focus and helps us to diversify our existing operations. RTW is that company."

He added that RTW has similar operating philosophies and cultural beliefs, and is led by a strong management team that has well positioned the company for the future.

"We will bring capacity and capability to RTW as it continues to grow its workers' compensation insurance and service platforms into the future," he promised.

Keefe, Bruette and Woods Inc. acted as financial advisor and Lindquist & Vennum PLLP acted as legal counsel for RTW in this transaction. Lathrop & Gage L.C. acted as legal counsel to Rockhill in the transaction.

Rockhill writes specialty property-casualty business through its subsidiaries, Rockhill Insurance Company and Plaza Insurance Company.

RTW Inc. provides products and services to manage insured and self-insured workers' compensation, disability and absence programs.

RTW provides these services, primarily directed at workers' compensation, to employers insured through its wholly owned insurance subsidiaries, ACIC and BCIC; self-insured employers on a fee-for-service basis; state assigned risk plans on a percent of premium basis; other insurance companies; and agents and employers on a consulting basis.