Transatlantic Holdings and Validus Sign Confidentiality Agreement

Setting up negotiations that could lead to a merger of the two reinsurance companies, Transatlantic Holdings and Validus Holdings Ltd. said Friday that they had signed a confidentiality agreement.

Source: Source: NY Times | Published on September 26, 2011

Under the terms of their agreement, Validus has agreed not to buy additional shares in Transatlantic and will also freeze its effort to oust its target’s board through a consent solicitation until Oct. 31. The two sides have also put their legal battle in Delaware on hold.

The accord settles one of Validus’s criticisms of the deal process: that Transatlantic had demanded too long of a standstill period that prevented Validus from buying additional shares. Validus had previously complained that it was asked to agree to a standstill as lengthy as two years.

Friday’s announcement could put Validus one step closer to buying Transatlantic, ending a months-long hostile takeover battle. Transatlantic has consistently rejected Validus’s stock-and-cash offer — valued at $44.89 a share as of Friday’s close — as too low.

Shares in Transatlantic closed on Friday at $46.65.

Still, Validus has outlasted rival suitors. Allied World Assurance struck a merger agreement with Transatlantic in June, but was forced to withdraw its all-stock merger in the face of stiff shareholder opposition. And a unit of Berkshire Hathaway proposed a $52-a-share all-cash bid, but Transatlantic said the offer gave little upside for its shareholders if the combined company improved down the road.