A Czech investor that vigorously opposed AmTrust’s $2.95bn buyout by controlling shareholders backed by Stone Point Capital has fired a new salvo in its battle via an appeal to the European Commission.
Krupa Global Investments, which has changed its name from Arca Capital, said it filed an antitrust complaint against AmTrust and Stone Point with the European Commission over the already-closed buyout.
The Czech investor alleges that the parties breached EU rules concerning anti-competitive business practices.
It said the buyout by Stone Point Capital and members of the Zyskind/Karfunkel family, which together formed acquisition vehicle Evergreen, “was suspicious”.
“KGI contends that AmTrust and Stone Point potentially engaged in advance of the aforementioned transaction in violation of EU law,” Krupa said.
It accused the parties of deliberately running down AmTrust companies through an agreement on “collective boycotting of AmTrust customers by lowering the stability of insurance products provided by AmTrust”.
It also said AmTrust and Stone Point – whose portfolio companies include insurers – agreed not to compete with each other in certain areas of the insurance business “thereby reducing competition and adversely impacting consumers”.
Krupa also suggested a rapid stock decline at AmTrust after the carrier first revealed accounting irregularities in February 2017 “may have been caused by manipulation by AmTrust management, Stone Point and the Zyskind/Karfunkel for the purpose of conducting the aforementioned merger at the lowest possible price”.
The-then Arca Capital had vowed to continue to fight the AmTrust buyout after activist investor Carl Icahn succeeded in forcing the bidders to lift the price to $14.75 from $13.50 per share. The offer concerned the 45 percent of AmTrust held by minority investors.
Krupa called on the European Commission to investigate an alleged breach of Article 101 of 2003 antitrust regulation.
Founder and chairman Pavol Krupa said: “AmTrust, Stone Point Capital and the Zyskind/Karfunkel family have disrespected investors through pushing an absurdly low priced privatisation transaction and disenfranchising minority shareholders.
“They have disrespected their customers through their anti-competitive activities, which have increased prices and decreased the quality of the product. Now, we believe they have brazenly disrespected the European Union through violating established antitrust regulations.
"We believe that a full investigation by EU regulators will show conclusively that AmTrust, Stone Point and the Zyskind/Karfunkel family have failed to follow EU regulations and that subsequently appropriate action will be taken."
In a previous version of the story we had incorrectly stated that Krupa was taking advice from law firm Paul Weiss. We can confirm that this is not the case.