IPC shareholders reject Max Capital deal; Validus ready to step in

By Lisa Kerner

Charlotte, N.C., June 12 - Max Capital Group Ltd. said it terminated its merger agreement with IPC Holdings, Ltd. after a majority of IPC's shareholders voted against the proposals relating to the planned amalgamation with Max at a special meeting on Friday.

Max's stockholders voted in favor of amalgamation at a separate special meeting also held on Friday.

As previously reported, Max and IPC agreed to combine in a stock-for-stock transaction valued at approximately $912 million. They later amended their agreement to include the payment of two special cash dividends totaling $2.50 per share that would have been payable to IPC shareholders if the IPC/Max deal had closed.

Max does not believe that further enhancement of its proposal would be advantageous for its shareholders, said chairman and chief executive officer W. Marston (Marty) Becker in a statement.

Validus Holdings Ltd. offered to acquire IPC for $3.75 in cash and 1.1234 Validus voting common shares for each IPC common share for a total consideration of $30.32 per IPC share based on Validus' closing price on Thursday.

Despite IPC's rejection of the offer, Validus began an exchange offer for IPC shares. The offer ends at 5 p.m. ET on June 26.

"We have heard the message sent by IPC shareholders regarding the Max transaction," IPC chairman Kenneth L. Hammond said in a news release. "Consistent with our fiduciary duties, the board will review all strategic alternatives to maximize shareholder value, including sale of the company, and as part of this review will give consideration to Validus."

According to Validus, approximately 72% of the IPC votes cast were against the proposed Max amalgamation.

"By rejecting the Max amalgamation by an overwhelming margin, IPC shareholders have clearly spoken," Validus chairman and CEO Ed Noonan said in a company news release.

"We now expect IPC's board to heed the message sent by IPC's shareholders by agreeing to Validus' pending amalgamation agreement without delay so that IPC's shareholders can receive the superior value offered by Validus promptly," Noonan said.

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.

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