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Fidelity counter-bid offers a few dollars more

A minor bidding war has broken out for Fidelity shareholders with a new higher proposal on the table just days after Farmers’ Mutual Group’s (FMG) indicative offer of $72 per share.

Thursday, May 10th 2007, 10:11PM

by David Chaplin

Karl Trotter, whose family trust owns over 20,000 Fidelity shares, has sent a letter to the insurance company’s shareholders offering $75 per share.

Trotter said FMG was issued Fidelity shares valued at $72 per share in February as part payment for its life insurance arm but that price “did not reflect the true value of the company”.

“On the face of it $72 might seem high but it undervalues Fidelity... I just want to put shareholders in the position of having a fairer offer,” he said.

Trotter said while it was difficult to accurately value Fidelity before the latest full-year results were known he was “comfortable” paying $75 per share.

Gordon Smith, FMG chief, told Good Returns this week the company, which already owns 8% of Fidelity, is looking to lift its stake to 10%.

Smith said the $72 per share was an indicative offer and FMG would negotiate on a case-by-case basis.

He said interest to date in the offer from Fidelity shareholders has been minimal.

In his letter to shareholders Trotter said: “As my family trust’s resources are not limitless, it might be that this invitation will need to be withdrawn without further notice.

“However, until that point is reached, I will deal on a first come, first served basis.”

He also expected only a few Fidelity shareholders would be interested in selling.

“I’ve had a couple of encouraging phone calls but no-one’s wanted to sell... they said ‘thanks but no thanks’,” Trotter said.

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