Bermuda-based (re)insurer Validus has made a counter-offer for Transatlantic Holdings, which it says is superior to that made by Allied World Assurance on 12 June.
Validus’s offer is a combined cash and stock amount totalling $55.95 a share – a 27.1% premium to Transatlantic’s stock price on 10 June and a 12.1% premium to Allied World’s offer.
Validus has a history of disrupting what appear to be done deals. The company stole catastrophe specialist IPC Re from under the nose of rival (re)insurer Max Capital - now known as Alterra - in 2009.
Under the Validus offer Transatlantic shareholders would receive 1.5564 Validus shares and a special pre-closing dividend of $8 in cash.
Under the Allied World offer shareholders would receive 0.88 Allied World shares for each of their Transatlantic shares.
Validus added that the share portion of its offer would be tax free to Transatlantic shareholders, while Allied World’s would be fully-taxable.
"Our proposal represents a compelling strategic combination that will generate superior value for both Validus and Transatlantic shareholders. We will create a broadly diversified global reinsurance leader," said Validus chairman and chief executive Ed Noonan in a statement.
He added: “Combining a leader of the short tail reinsurance market with a leader of the long tail market creates a franchise properly balanced to manage the reinsurance underwriting cycle. Validus has a superior business plan that will drive earnings by capturing the best priced segments of the reinsurance market while strengthening Transatlantic's balance sheet to position it to better withstand the remaining leg of the soft casualty pricing cycle."
In a letter to Transatlantic shareholders, Noonan also claimed that the performance of Validus’s stock had been superior to that of Allied World’s. For example, the letter said Validus had generated 55% growth in shareholder returns since its initial public offering, compared with 24% at Allied World.