Both players offer 83p a share, but only Mark Byrne’s Haverford has Omega board approval

After a period of relative quiet and inaction, the Omega takeover story exploded during Monte Carlo week.

The two favourites to buy the firm – fellow Lloyd’s (re)insurer Canopius and Haverford, an investment firm chaired by former Flagstone Re chairman Mark Byrne – have started a tit-for-tat battle for Omega.

Level pegging

First Haverford stepped in with an 83p-a-share offer for 25% of Omega yesterday which, crucially, has been agreed with the board. Canopius responded this morning with an ‘indicative proposal’ to offer the same amount, subject to due diligence.

Shareholders have agreed to nothing at this stage, so it is technically still anybody’s game, but it should be noted Haverford’s board-agreed offer trumps Omega’s indicative proposal at this stage.

Equally resolute

Having spoken to Canopius’s Michael Watson and Byrne this week, they are equally resolute. Watson says he is still interested in buying Omega at the right price, and that it is a good strategic fit for his firm. And Byrne argues that anyone, Canopius included, would struggle to buy 100% of Omega.

Byrne has read shareholder mood

I would argue Byrne may have the upper hand at the moment. He argues he is seeking only 25% of the company because of deep divisions between shareholders. Some want to get out, while others who bought in at higher levels are loath to sell up for 83p. Byrne argues his deal will appeal to both – allowing those who want to sell up an exit route, while improving Omega’s fortunes, and thus raising its value, for those who would rather hold on for a better price.

Canopius’s one-size-fits-all approach appears not to address this important shareholder rift.

Byrne’s arguments make a lot of sense. One only has to look at how many companies have approached Omega and walked away, and how long the company has been under offer, to realise this is no simple takeover.

Watson is shrewd player

However it would be unwise to underestimate Michael Watson, who has proved himself a shrewd businessman in building up Canopius.

And if Canopius is not successful in winning the battle for Omega, it is unlikely to suffer much. It has plenty of other strings to its bow. For example it plans to start writing political risk business, subject to Lloyd’s approval, in the fourth quarter this year, and its new Swiss reinsurance operation will start underwriting as of January 1 next year.

Also, for Canopius, it is not as though Omega is the only game in town.