Icahn Opposes AmTrust Deal

Carl C. Icahn
767 Fifth Avenue, 47th Floor
New York, New York 10153
Ladies and Gentlemen:
I am one of your largest shareholders and own almost 9.4% of AmTrust Financial Services, Inc. (“AmTrust”).  I am strongly AGAINST the proposed going-private transaction and intend to solicit proxies AGAINST the deal.
Recently, a number of AmTrust shareholders contacted us to request our help in interceding in opposition to your opportunistic going-private transaction.  We decided to look into the situation and found that what we had been told was correct:  The Zyskind/Karfunkel families, with the help of the “independent” Special Committee of the Board, are blatantly taking advantage of AmTrust’s minority shareholders. Going-private transactions are rarely without controversy, but the law is clear: Non-controlling shareholders must be treated fairly, both in terms of process and price.
The Zyskind/Karfunkel squeeze-out transaction completely fails to satisfy these criteria. You have structured your take-over to ensure that the transaction is reviewed under the lower, more deferential “business judgment” standard, as opposed to the enhanced, more stringent “entire fairness” standard.  However, to achieve this important goal, the Company needs to obtain the affirmative vote of a majority of the minority of the outstanding shares (meaning, those shares not owned by the Zyskind/Karfunkel families and other insiders). (This means that the Company needs to obtain the affirmative vote of approximately 43.9 million shares, or 22.4% of the total outstanding shares of AmTrust.)
The law requires the vote to be fair and informed, but the Board has created a voting process that makes a sham of Delaware’s requirements. Back in March, the Board stealthily set a record date of April 5, 2018, but did not bother telling shareholders or the market.  As a result, purchasers of the stock throughout the month of April, who rightly assumed they would be able to vote their shares, have been disenfranchised by this Board.  The vote scheduled for June 4, 2018 makes a travesty of the entire shareholder electoral process, and “shareholders” who no longer own the shares will be voting on, and potentially deciding, our Company’s future!  Such a vote is absurd and devoid of fairness.  Therefore, we believe that the Delaware courts will not grant the Zyskind/Karfunkel transaction business judgment treatment and will instead require this transaction be judged by entire fairness.
The Board should immediately change the record date and special meeting date to ensure a fair vote.  Failing to make that change will unfairly and irreparably disadvantage tens of millions of shares that were acquired throughout the month of April when purchasers had no idea they were acquiring their shares after the record date.  We are currently engaged in discussions with our Delaware litigators and are assessing our options to correct the manifest injustice that will occur if the Board fails to change the record and special meeting dates.
Since the special meeting is just over two weeks away, time is of the essence.

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