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Member, Beacon International Group, Ltd.
NEW YORK—Transatlantic Holdings Inc. said late Tuesday that Validus Holdings Ltd.’s recent unsolicited bid for the New York reinsurer doesn’t beat an earlier merger offer from Allied World Assurance Co. Holdings A.G. but that it was open to further negotiations.
Transatlantic said in a statement that its board has determined that Validus’ proposal is “reasonably likely” to lead to a superior one and that the failure to enter into discussions with Validus would result in a breach of its duties to shareholders, and it agreed to discuss a possible deal with Validus.
Validus said in a statement Wednesday that it stands by its earlier unsolicited bid for Transatlantic. In a filing with the Securities and Exchange Commission on the same day, it appealed to the New York reinsurer’s shareholders to vote against the Allied World merger, explaining that its offer provides “significantly greater financial value.”
When Validus announced its offer last week, it was worth around $3.5 billion, compared with the $3.2 billion value of the Allied World deal.
The bid was valued at $55.95 per share on July 12, but after the market’s response last week it became worth only $51.61 per share vs. Allied World’s $50.36 per share, according to a July 14 report released by Morgan Stanley.
Allied World Chairman, President and CEO Scott Carmilani said in a statement Tuesday that he agreed with Transatlantic’s decision.
“Allied World remains fully committed to the terms of our merger of equals agreement, which we believe provides the best long-term value and benefits for all shareholders,” Scott Carmilani, chairman, president and CEO of Zug, Switzerland-based Allied World, said in a statement. “We look forward to completing our merger of equals as early as possible in the fourth quarter.”