Omega Underwriting has released the following response to Hardy Underwriting Group's announcement of the termination of merger talks earlier today (1 July).
The Board of Omega notes the announcement made by the Board of Hardy today terminating merger discussions.
Omega is encouraged by the support for the strategic and commercial rationale behind its merger proposal which it has received from shareholders in both companies. However it has not yet proved possible to agree terms which would be acceptable to the Board of Hardy.
The financial rationale behind Omega's proposal to Hardy is to arrive at a relative valuation of the two companies based upon respective net tangible assets and "pipeline" profits. The Board of Omega believes that such a "fair value for fair value" formula would balance the interests of both sets of shareholders.
Omega has to date not received any financial information required to construct such a formula and has therefore been unable to engage in a meaningful two way dialogue with Hardy, despite, in the spirit of making progress, disclosure to Hardy of the financial information on Omega required for such a purpose.
A partial cash alternative has also been proposed to Hardy as part of Omega's merger proposal. Omega reserves the right to make an offer with no partial cash alternative.
Omega has proposed a mutual Due Diligence exercise to Hardy, but as yet no exchange of information has taken place.
During discussions with shareholders, in meetings with Hardy and its advisers and in correspondence between the parties, Omega has consistently and specifically iterated its respect for the long term track record of Hardy's traditional core syndicate business at Lloyd's and its desire to work with the proven team of underwriters on Syndicate 382. This resolve remains and nothing in Hardy's announcement of today changes Omega's position in that regard.
The Board of Omega continues to believe in the strategic and commercial rationale for the merger and in the terms proposed to Hardy. Omega therefore remains interested in pursuing a merger and is continuing its dialogue with Hardy shareholders.
