Validus throws in more cash and gets IPC board agreement to merger
The board of IPC has agreed to a sweetened offer from Validus.
IPC's board earlier rejected Validus' approach - at that time a hostile offer -, preferring the offer from Max. However, IPC shareholders then disagreed with their board, and the Max deal was set aside.
The current offer from Validus is that IPC shareholders will receive $7.50 in cash and 0.9727 Validus voting common shares for each IPC common share. Validus’ previous offer was $3.75 in cash and 1.1234 Validus shares for each IPC share.
Earlier this month, Flagstone made a rival offer of 2.638 of new common shares for each IPC common share plus $5.50 per share in cash.
Earlier this week, PartnerRe agreed to buy Paris Re. Consolidation has come to the reinsurance sector.
If Validus' new offer is approved by IPC shareholders, the merged entity will have $3.4bn in shareholders’ equity (compared with $2bn for Validus on its own and $1.8bn for IPC on its own).
Some say that to be taken seriously these days, a reinsurance company needs $1.5 or $2bn in capital. Solely on that basis, a few merger candidates present themselves —Hiscox, Montpelier Re Holdings, Max itself, Lancashire Holdings and Flagstone Reinsurance Holdings have capital of less than $1.5 bn. Platinum Underwriters Holdings has less than $2bn.