Medical professional liability insurer ProAssurance said Tuesday it will buy workers’ compensation insurer Eastern Insurance in a deal valued at $205 million.
ProAssurance said it has been looking to move into the workers’ compensation market for some time. It said Eastern Insurance has a strong health care business and said the deal will add to its net income starting in 2014.
The boards of both companies have approved the sale and Eastern Insurance shareholders will have the opportunity to vote on the proposal. ProAssurance said it expects to complete the purchase by Jan. 1.
Shares of Eastern Insurance closed at $21.16 on Monday. ProAssurance’s offer of $24.50 per share comes at a premium of nearly 16 percent to that price.
In 2012, Eastern Insurance reported $168.1 million in revenue, up 22 percent from 2011. ProAssurance had $715.9 million in revenue in 2012, down slightly from the previous year. ProAssurance is based in Birmingham, Ala., and Eastern Insurance is based in Lancaster, Pa.
Eastern Insurance Holdings Inc. shares shot up $3.22, or 15 percent, to $24.38 in morning trading. ProAssurance Corp. shares lost 46 cents to $45.68 after the opening bell.