By Lisa Kerner
Charlotte, N.C., May 18 - Validus Holdings, Inc. announced on Monday that it increased its offer for IPC Holdings, Ltd. to include $3.00 per share in cash plus 1.1234 shares of Validus voting common shares for each IPC common share held.
The new offer is valued at $30.14 per IPC share based on Validus' closing price on May 15.
Validus initially offered to acquire IPC for 1.2037 shares of Validus voting common shares, with no cash consideration. Based on the May 15 closing price, that offer had a value of $29.08 per IPC share.
The exchange offer for IPC's shares was extended to 5 p.m. ET on June 26.
"This increase underscores our strong commitment to the acquisition of IPC and reinforces the clear superiority of our offer over IPC's proposed amalgamation with Max Capital [Group Ltd.]," Validus chairman and chief executive officer Ed Noonan said in a news release.
According to Noonan, IPC shareholders had requested a cash component.
"Following numerous meetings with IPC shareholders, we believe there is widespread support for our acquisition of IPC, and in light of our increased offer, we urge the IPC board of directors to determine that our new proposal is superior to the transaction with Max and to withdraw its support for the Max amalgamation, which provides no consideration to IPC shareholders and significantly increases their exposure to risky assets and underperforming business lines," Noonan said.
IPC said it will review Validus' revised offer with its advisers and then make a formal recommendation to its shareholders.
IPC, Max merger set
Max said the latest offer from Validus amounts to an increase in value of only $0.16, or 0.5%, compared to its original offer, which was valued at $29.98 per IPC share when it was made on March 31.
"Based upon the decline in Validus' stock price since its initial offer, notwithstanding the strong equity markets, this change simply brings them back to where they originally started," Max chairman and CEO W. Marston (Marty) Becker said in a company press release.
"The new Validus offer does not change the fundamental fact that Validus represents highly correlated risk concentration while the IPC/Max merger fulfills IPC's strategic objective of creating true diversification and shareholder value creation," Becker said.
Becker said Max is committed to completing its fully negotiated merger with IPC.
As previously reported, IPC shareholders will be asked to vote on the company's amalgamation with Max on June 12.
Max and IPC agreed to combine in a stock-for-stock transaction valued at approximately $912 million. Max shareholders will receive 0.6429 IPC shares for each Max share.
The companies said they have fulfilled all of the regulatory conditions required to complete their amalgamation agreement, including approvals from the insurance commissioners of the states of Indiana and Delaware and early termination of the Hart-Scott-Rodino waiting period granted by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice.
Validus wants IPC
Validus has filed an application with the Supreme Court of Bermuda to convene a meeting of IPC shareholders in connection with its proposed scheme of arrangement.
The Supreme Court of Bermuda Commercial Court decided not to grant Validus' application for an expedited trial on its litigation against IPC and Max. Validus said its lawsuit challenges the $50 million termination fee and "no-talk" provision in the IPC/Max agreement.
Validus previously announced a three-part plan to acquire IPC that includes soliciting IPC shareholders to vote against the proposed Max amalgamation, beginning an exchange offer for all IPC common shares and pursuing a scheme of arrangement under Bermuda law.
Based in Hamilton, Bermuda, Validus provides insurance coverage and reinsurance coverage in the property, marine and specialty lines markets.
IPC, located in Pembroke, Bermuda, provides property catastrophe reinsurance as well as aviation, property-per-risk excess and other short-tail reinsurance.
Specialty insurance and reinsurance provider Max is based in Hamilton, Bermuda.
Mentioned in this article
| IPC Holdings, Ltd.: | Nasdaq: IPCR
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| Max Capital Group Ltd.: | Nasdaq: MXGL
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| Validus Holdings, Ltd.: | NYSE: VR
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