Max Capital committed to merger with IPC Holdings despite Validus offer

By Lisa Kerner

Charlotte, N.C., April 2 - Max Capital Group Ltd. affirmed its view that its offer for IPC Holdings, Ltd. is superior to the unsolicited takeover proposal made for IPC by Validus Holdings, Ltd.

"In addition to providing IPC with 29% more tangible book value per share compared to Validus' takeover proposal, which is the primary valuation driver for insurance companies, the Max/IPC combination will provide a diversified and balanced platform for growth that should drive stronger performance and value for shareholders for many years," Max chairman and chief executive officer Marty Becker said in a news release.

Becker outlined the advantages of a Max/IPC merger in a letter to IPC's board of directors on Thursday.

One advantage, according to Becker, is that IPC and Max can combine more quickly and "with greater certainty," possibly as early as June.

Becker also pointed to Max's diversified shareholder base and its long-term history of successful acquisitions.

"We believe Validus has created an unnecessary and unproductive disruption for its own opportunistic purposes, which should not distract either IPC's or Max's employees and customers from our amalgamation, which we both believe to be in the best interests of our shareholders," Becker said in the letter.

As previously reported, Validus offered to acquire IPC in a share-for-share exchange that values IPC shares at $29.98.

Each IPC common share would be exchanged for 1.2037 Validus common shares, according to a Monday letter to IPC's board of directors from Validus.

Max and IPC agreed in early March 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.

IPC said its board will review the Validus proposal consistent with its obligations under the agreement with Max and will comment when it makes a determination regarding the offer.

Validus asked IPC's board to respond to its binding offer by April 15.

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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