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Transatlantic Holdings and Validus Sign Confidentiality Agreement

Source: NY Times

Posted on 26 Sep 2011

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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.

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.