Validus to buy IPC for $1.65 billion, beats Flagstone
Validus Holdings Ltd said it agreed to buy Bermuda reinsurance rival IPC Holdings Ltd for $1.65 billion in cash and stock, beating out Flagstone Reinsurance Holdings Ltd in a bidding war.
IPC accepted a sweetened offer in which shareholders would get 0.9727 of a Validus share and $7.50 in cash for each of their shares. That values IPC at $29.48 per share, or 6.8 percent above its Wednesday closing price.
Validus' previous offer included more shares but only half as much cash.
Flagstone was not immediately available for comment. On July 1, it offered 2.638 of its common shares and $5.50 in cash for each IPC share. That valued IPC at about $1.74 billion, or $31.17 per share, based on Wednesday's close.
In premarket trading, IPC shares rose 3.4 percent to $28.55 and Flagstone shares rose 9.5 percent to $10.65. Validus price quotations were not immediately available.
Validus started a hostile bid for IPC in March, leading to a breakup of IPC's planned takeover by Max Capital Group Ltd. IPC later sought other suitors.
Adding IPC would allow a buyer to sell more property catastrophe reinsurance to benefit from rising rates.
Validus was created in 2005, less than two months after Hurricane Katrina. It was backed by Aquiline Capital Partners LLC, a private equity firm run by former Marsh & McLennan Cos Chief Executive Jeffrey Greenberg, who remains on Validus' board.
The Validus and IPC boards have approved the merger, which will leave Validus shareholders with a 62 percent stake in the combined company and IPC shareholders with 38 percent.
The transaction is expected to close this quarter pending shareholder approvals. Validus' senior management, including Chief Executive Ed Noonan, would run the combined company.
Greenhill & Co advised Validus, while Skadden, Arps, Slate, Meagher & Flom LLP, Cahill Gordon & Reindel LLP and Appleby provided legal advice. JPMorgan and the law firms Sullivan & Cromwell LLP and Mellon Jones & Martin advised IPC.
(Reporting by Jonathan Stempel; editing by John Wallace)
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