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Validus Goes Directly to Shareholders on Bid for Transatlantic Holdings

Source: WSJ - Melodie Warner

Posted on 25 Jul 2011

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Validus Holdings Ltd. took its $3.5 billion tender offer to acquire Transatlantic Holdings Inc. directly to the reinsurer's shareholders after its board insisted Validus agree to a standstill agreement.

The hostile bid raises the stakes in a battle by two reinsurance companies to buy a third. Earlier this month, Validus proposed merging with Transatlantic, aiming to scuttle a prior $3.2 billion merger agreement between the reinsurer and Allied World Assurance Co. Holdings AG. Transatlantic had told its shareholders not to act on Validus' unsolicited counter offer until the board reviewed the latest deal.

Validus said Monday that as a precondition to negotiations and an exchange of information, Transatlantic wanted a restrictive standstill agreement that would prevent Validus from pursuing its offer without Transatlantic board approval.

"This position is inconsistent with the Transatlantic board's previously announced determination that the failure to enter into discussions with Validus would result in a breach of its fiduciary duties, and would effectively give the Transatlantic Board a veto over our transaction which we cannot accept," said Validus Chairman and Chief Executive Ed Noonan.

Both Validus and Allied World Assurance could roughly double their size if they acquired Transatlantic, which would give the winner clout in negotiating reinsurance contracts. "The reinsurance business is one of scale," Mr. Noonan said in an interview last week after the company initially made its unsolicited bid.