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Translantic Sues Validus for Misleading Stockholders in Takeover Attempt

Posted on 28 Jul 2011

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In a lawsuit filed today, Transatlantic Holdings Inc. accused Validus Holdings Ltd., the reinsurer trying to take it over, of attempting to mislead Transatlantic stockholders into tendering their shares in violation of securities law.

The lawsuit was filed in federal court in Wilmington, Delaware, and says that Validus has been making “materially false and misleading statements” to thwart a more favorable transaction with Allied World Assurance Company Holdings AG, according to court papers.

“Validus has sought to mislead stockholders by obfuscating or simply ignoring, for example, that its exchange offer is conditioned on obtaining financing amendments or waivers” and involves “additional tax consequences,” New York-based Transatlantic said in its complaint.

Validus said July 25 that it would begin offering 1.56 common shares and $8 in cash for each Transatlantic share, for a value of about $3.5 billion based on stock prices when the bid was announced. Allied, based in Zug, Switzerland, was to exchange 0.88 share for each Transatlantic share, for a value of $3.2 billion.

Jonathan Doorley, a spokesman for Validus, didn’t immediately return an e-mail message seeking comment on the lawsuit.

Transatlantic is seeking a court order to force Validus to correct its statements and pay litigation costs.