f8k060910.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: (Date of earliest event reported) June 9, 2010

OLD REPUBLIC INTERNATIONAL CORPORATION

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(Exact name of Registrant as Specified in Charter)

Delaware	001-10607	36-2678171
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

307 North Michigan Avenue, Chicago, Illinois 60601

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(Address of Principal Executive Offices) (Zip Code)

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(Registrant’s telephone number, including area code)

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(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

(17 CFR 140.14d-2(b))

□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

(17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On June 9, 2010, PMA Capital Corporation, a Pennsylvania corporation (“PMA”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Old Republic International Corporation, a Delaware corporation (“Old Republic”), and OR New Corp., a wholly owned subsidiary of Old Republic (“Merger Sub”) formed specifically for the purpose of the proposed merger. The Merger Agreement provides, upon the terms and subject to the conditions set forth in the Merger Agreement, for a merger of PMA and Merger Sub with PMA being the surviving corporation and becoming a wholly owned subsidiary of Old Republic (the “Merger”).

At the effective time of the Merger, each share of PMA common stock issued and outstanding immediately prior to the effective time will be automatically cancelled and converted into the right to receive 0.55 shares (the “Exchange Ratio”) of common stock of Old Republic and all outstanding stock options, restricted shares and other equity awards will be converted, based on the Exchange Ratio, into stock options, restricted shares and equity awards covering Old Republic common stock. The Exchange Ratio will be adjusted if the volume weighted average price per share of Old Republic common stock for the 20 consecutive trading days ending on and including the fifth trading day prior to, but not including, the closing date of the Merger exceeds $17.00 or is less than $12.50 , but in no event will the Exchange Ratio exceed 0.60 or be less than 0.50.

PMA and Old Republic have made certain representations and warranties in the Merger Agreement. The representations and warranties are as of specific dates and were made solely for the benefit of the parties to the Merger Agreement. The representations and warranties were negotiated with the principal purpose of establishing the circumstances under which a party may have the right not to close the Merger if the representations and warranties of the other party prove to be untrue and to allocate risk between the parties, rather than establishing matters as facts. The representations and warranties may be subject to a contractual standard of materiality different from those generally applicable under the securities laws. Securityholders should not rely on the representati ons and warranties or any description of the representations and warranties as characterizations of the actual state of facts or condition of PMA or Old Republic.

The closing of the Merger is subject to customary conditions, including approval of PMA’s shareholders and receipt of antitrust and insurance regulatory approvals. PMA has agreed to hold a meeting of its shareholders to consider and vote upon the approval of the Merger and, subject to certain exceptions, to recommend approval of the Merger to its shareholders. In addition, PMA has agreed that it will not solicit or facilitate inquiries or proposals relating to, or, subject to certain exceptions, engage in discussions or negotiations regarding, alternative business combination transactions or other transactions through which a third party would acquire stock representing 20% or more of the voting power of PMA or any subsidiary of PMA.

The Merger Agreement provides certain termination rights for both PMA and Old Republic, including the right of PMA to terminate the Merger Agreement so that it can enter into an agreement providing for a “Superior Proposal” (as that term is defined in the Merger Agreement). In the event the Merger Agreement is terminated because PMA’s board of directors fails to recommend approval of the Merger, changes its recommendation or approves or recommends an alternative proposal or transaction, PMA will be required to pay Old Republic a termination fee of $8 million.

In the event that PMA receives an alternative proposal and the Merger Agreement is then terminated (i) by Old Republic due to a breach of representations, warranties or covenants by PMA, (ii) by either party because shareholder approval is not obtained at the meeting called to approve the Merger, or (iii) by either party because the Merger has not closed by December 31, 2010 and PMA has materially breached the Merger Agreement or the approval of PMA’s shareholders has not been obtained, then PMA will be required to reimburse Old Republic for expenses incurred in connection with the Merger. In that event, and if PMA consummates an alternative transaction within six months following termination, PMA would be required to pay Old Republic an $8 million termination fee less the amount of any expenses previously reimbursed.

Item 8.01. Other Events

Old Republic International Corporation and PMA Capital Corporation issued a joint press release on June 10, 2010, that announced the Merger Agreement.

Item 9.01. Financial Statements and Exhibits

99.1	Joint Press Release, June 10, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OLD REPUBLIC INTERNATIONAL CORPORATION
	Registrant



Date: June 11, 2010	By: /s/ Spencer LeRoy III
		Spencer LeRoy III
		Senior Vice President,
		Secretary, and General Counsel

99.1	Joint Press Release, June 10, 2010

Exhibit 99.1

NEWS BULLETIN

For Further Information:

AT OLD REPUBLIC:

AT PMA CAPITAL CORPORATION:

A.C. Zucaro

Chairman & CEO

(312) 346-8100

Vincent T. Donnelly

President & CEO

(610) 397-5298

JOINT NEWS RELEASE

JUNE 10, 2010

Old Republic International Corporation	PMA Capital Corporation
(NYSE: ORI)	(NASDAQ: PMACA)

OLD REPUBLIC AND PMA CAPITAL ANNOUNCE $365 MILLION MERGER AGREEMENT

Chicago, Illinois and Blue Bell, PA, June 10, 2010 – Old Republic International Corporation (NYSE: ORI) (“Old Republic”) and PMA Capital Corporation (NASDAQ: PMACA) (“PMA”) announced today that the companies have entered into a merger agreement pursuant to which Old Republic will acquire all of PMA’s outstanding common stock. Under the terms of the agreement approved by the boards of directors of both companies, Old Republic will issue 0.55 shares of Old Republic common stock in exchange for each outstanding common share of PMA. Depending on the price of Old Republic’s common stock preceding the closing of the merger, the exchange ratio may be adjusted upwards or downwards, but will not exceed 0.60 or be less than 0.50. The initial exchange ratio represents a premium of approximately 15% to the closing price of PMA’s common stock on June 8, 2010, the last trading day before the signing of the merger agreement. As of the latter date the transaction therefore attributes a total enterprise value for PMA of approximately $365 million, consisting of $228 million for PMA common shares and $137 million for its debt.

The transaction is expected to close during the third quarter of 2010, subject to approval by PMA’s shareholders, regulatory approvals and other customary closing conditions.

Speaking from PMA’s headquarters, Vincent Donnelly, President and CEO, said that “We are pleased that we were able to reach this agreement with Old Republic, and we believe that this merger will have positive benefits to our shareholders, clients and employees. We expect that this transaction will enable our shareholders to realize greater long-term value than if we continued to operate as a stand-alone entity. We also believe that the additional financial strength and stability of a larger well diversified company will benefit our clients, employees and other stakeholders. Following the closing, we will continue to do business as the PMA Companies, and we will maintain our company headquarters in Blue Bell, Pennsylvania with our experi enced leadership team and local service locations. We are excited about the opportunity that Old Republic presents for the continued profitable growth of our businesses.”

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Old Republic International Corporation

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In announcing the merger from Old Republic’s Chicago headquarters, Al Zucaro. Chairman and CEO stated that “. . . we are extremely pleased to welcome PMA’s management and all of its associates to our family of companies. This merger is consistent with our long term strategic plan to grow our General Insurance business. The alliance of our two companies results in a well-capitalized insurance group appropriately positioned to take advantage of the many opportunities and synergies which will no doubt be available to us. The two companies share a commitment to conservative underwriting and a focus on select industries important to the American economy. We are convinced that the long-term orientation of the decision to effect this merger will at once provide greater scale, balance and dive rsification for our general insurance business, and produce enhanced future benefits for the combined shareholder groups.”

B of A Merrill Lynch is acting as exclusive financial advisor and Ballard Spahr LLP as legal counsel to PMA Capital Corporation. Macquarie Capital acted as financial advisor to Old Republic.

Background

PMA Capital Corporation, headquartered in Blue Bell, Pennsylvania, is a holding company whose operating subsidiaries provide insurance and fee-based services. Insurance products include workers’ compensation and other commercial property and casualty lines of insurance. Fee-based services include third party administrator, managing general agent and program administrator services. The operating subsidiaries are marketed under PMA Companies and include The PMA Insurance Group, PMA Management Corp., PMA Management Corp. of New England and Midlands Management Corporation. As of March 31, 2010, PMA had assets of approximately $2.4 billion and common shareholders’ equity of $418 million or $12.96 per share. The current stock market valuation is approximately $199 million or $6.17 per share. For additional information visit www.PMACompanies.com.

Chicago-based Old Republic International Corporation is an insurance holding company whose subsidiaries market, underwrite and provide risk management services for a wide variety of coverages, principally in the property and liability, mortgage guaranty, and title insurance fields. One of the nation’s 50 largest publicly held insurance organizations, Old Republic has assets of approximately $14.3 billion and common shareholders’ equity of nearly $4.0 billion or $16.90 per share. Its current stock market valuation is approximately $3.1 billion or $12.86 per share. For the latest news releases and other corporate documents on Old Republic International visit www.oldrepublic.com.

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Forward-looking Statements

This press release includes certain forward-looking statements. The forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Old Republic or PMA to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the timing and completion of the merger, the ability to obtain regulatory and other approvals relating to the merger, and the effect of this announcement on PMA’s customer relationships, operating results and business generally. These factors also include, but are not limited to, the risks and uncertainties described in Old Republic’s and PMA’s reports filed with the Securities and Excha nge Commission (“SEC”). These filings include the Annual Reports on Form 10-K for the year ended December 31, 2009, which are available at www.sec.gov., Old Republic and PMA disclaim any intention or obligation to update or revise any forward-looking statements, except as required by law.

Additional Information

This press release does not constitute an offer for the sale or exchange of securities. Old Republic will file with the SEC a registration statement on Form S-4 that will include PMA’s proxy statement and will also constitute a prospectus of Old Republic. Old Republic and PMA also plan to file other documents with the SEC regarding the proposed transaction. A definitive proxy statement/prospectus will be sent to PMA’s shareholders. PMA SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER, OLD REPUBLIC AND PMA.

Shareholders may obtain free copies of the proxy statement and other documents filed by PMA (when available), at the SEC’s Web site at www.sec.gov or at PMA’s Web site at www.pmacapital.com. The proxy statement and such other documents may also be obtained for free, when they become available from PMA, by directing such request to Investor Relations, PMA Capital Corporation, 380 Sentry Parkway, Blue Bell, Pennsylvania, telephone: 610-397-5298.

PMA and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from PMA Capital’s shareholders in connection with the proposed transaction. Information concerning the interests of those persons is set forth in PMA’s proxy statement relating to the 2010 annual meeting of shareholders and annual report on Form 10-K for the fiscal year ended December 31, 2009, both filed with the SEC, and will also be set forth in the proxy statement relating to the transaction when it becomes available.

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