Validus Holdings, Ltd. announced that it has delivered to the Board of Directors of Transatlantic Holdings, Inc. a proposal to merge the businesses of Validus and Transatlantic.
Validus offered 1.5564 in shares and a special dividend of $8 in cash for every Transatlantic share. The total per share value of $55.95 is a 14% premium to Transatlantic's last closing price.
Allied World's offer is currently worth $3.12 billion, or $49.91 a share, based on its Tuesday closing price.
According to Validus, in addition to the meaningful premium and cash consideration, the proposed transaction with Validus is structured to be tax-free to Transatlantic stockholders with respect to the Validus voting common shares they receive in the merger.
"Our proposal represents a compelling strategic combination that will generate superior value for both Validus and Transatlantic shareholders. We will create a broadly diversified global reinsurance leader," stated Ed Noonan, Validus' Chairman and Chief Executive Officer.
"The combination of Validus' strong positions in Bermuda and London with Transatlantic's profile in the United States, continental Europe and Asia will produce a rare example of a complementary business fit with minimal overlap. Combining a leader of the short tail reinsurance market with a leader of the long tail market creates a franchise properly balanced to manage the reinsurance underwriting cycle. Validus has a superior business plan that will drive earnings by capturing the best priced segments of the reinsurance market while strengthening Transatlantic's balance sheet to position it to better withstand the remaining leg of the soft casualty pricing cycle."