Nationwide, which is based in Columbus, Ohio, said that the deal will boost its presence in business insurance. Harleysville distributes its products through a network of agents across 32 states. Nationwide Harleysville will maintain its current Pennsylvania headquarters.
The purchase price works out to $60 per share for all shares not owned by Harleysville group's parent company, Harleysville Mutual Insurance Co. The price is nearly double the Harleysville stock's closing price of $31.52 on Wednesday. Shares soared 85 percent in morning trading to hit $58.37. The stock's high in the past year had been $37.81.
Both Nationwide and Harleysville Mutual, as mutual insurance companies, are owned by their policyholders.
The companies say the combined organization will have over $16 billion in annual direct written premiums.
When the deal closes, Harleysville Group will become a wholly owned subsidiary of Nationwide. Harleysville will join Nationwide's property and casualty independent agency business unit. It will retain its Harleysville brand name. Harleysville Mutual policyholders will become customers of Nationwide Mutual.
The deal depends on approval from Harleysville shareholders and regulators in Pennsylvania and Ohio. It's expected to close early next year.
Nationwide is one of the country's largest diversified insurance and financial services organizations.
For the first six months of the year, Nationwide reported net income of $219 million, down from $483 million in the first half of 2010. Total operating revenue for the first half of 2011 was $10.5 billion.