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Shareholder objects to $3.2B Transatlantic, Allied World merger

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NEW YORK—A large shareholder has objected to New York-based reinsurer Transatlantic Holdings Inc.’s plan to merge with Zurich-based specialty insurer Allied World Assurance Co. Holdings A.G. in a $3.2 billion deal.

The two companies said Sunday that they had agreed to swap stock and expected their deal to close during the last quarter of this year, subject to regulatory and shareholder approval.

However, Davis Selected Advisers L.P., which owns a nearly 24% stake in Transatlantic, filed a statement Monday with the Securities and Exchange Commission expressing “serious concerns about the proposed transaction.”

Look for other options

The Tucson, Ariz.-based investment management firm said it may oppose the deal and encourage the company to explore other options.

Transatlantic declined to comment. Allied World did not respond to an emailed request for comment. A Davis Selected Advisers spokeswoman said it is against company policy to comment on individual holdings.

Under the proposed $3.2 billion deal, Transatlantic’s shareholders would end up with about 58% of the combined company and Allied World’s shareholders with about 42%.

Investors bid Transatlantic’s stock price to $49.46 per share in intraday trading Tuesday, from $44.01 per share at the market’s close on last week before the deal’s announcement Sunday. Allied World’s stock fell to $56.44 from $58.07 per share during the same time frame.

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