Lloyd’s insurer Chaucer plc has issued a statement endorsing the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Chaucer by 440 Tessera Limited (BidCo), a wholly-owned subsidiary of U.S. insurer The Hanover.
Under the terms of the Acquisition, Chaucer shareholders will be entitled to receive the following:
– 53.3 pence [$0.8723] in cash for each Chaucer Share, and
– 2.7 pence [$0.4418] in cash for each Chaucer Share as a final dividend in relation to the year ended 31 December 2010, which was announced by Chaucer on 7 March 2011.
Chaucer said that the overall acquisition price and the final dividend “value Chaucer’s fully diluted share capital at approximately £313 million (or approximately US$510 million), and together represent the following multiples:
– 1.09x Chaucer’s reported net tangible assets as at 31 December 2010; and
– 1.26x Chaucer’s pro forma net tangible assets as at 31 December 2010, adjusted for the effects of catastrophe losses announced by Chaucer in 2011. The pro forma multiple of 1.26x does not account for other trading during the period since 31 December 2010.
In addition the bulletin noted that The Hanover has received “irrevocable undertakings” from a number of investment funds and fund managers, “representing approximately 21.28 percent of the existing issued share capital of Chaucer,” to back the acquisition.
Chaucer said its directors, “who have been so advised by Kinmont and Willis Capital Markets & Advisory, consider the terms of the Acquisition to be fair and reasonable.” They will accordingly recommend that Chaucer’s shareholders vote in favor of the acquisition.
The Hanover’s President and CEO Frederick H. Eppinger commented: “Chaucer would represent a significant step forward in The Hanover’s journey to build a world-class property and casualty company. The combined organization would provide both companies with the benefits of greater scale, earnings diversification, and expanded market presence. Chaucer would enable us to further advance our specialty strategy, given its recognized expertise in underwriting energy, marine and aviation risks. We are excited to welcome Chaucer’s management and associates to our organization.”
Chaucer’s Chairman Martin Gilbert described The Hanover’s offer as a “compelling proposition;” adding that the acquisition price in cash is “attractive for shareholders, a significant proportion of whom are explicitly supporting the transaction. In addition, Chaucer’s clients, staff and other stakeholders are expected to benefit from the combination’s greater scale, diversity and capital resources.”
Chaucer Chief Executive Bob Stuchbery added that the company is “excited about the prospects of joining The Hanover. As part of The Hanover we will remain fully focused on delivering our Foundation Flex Flagship corporate strategy with the aim of further positioning us as the Lloyd’s specialist insurer of choice in our areas of expertise.
“Furthermore, under the ownership of The Hanover, we expect that we will be able to build on The Hanover’s market position, and access attractive specialty business through its strong US retail distribution. Overall, this is a great cultural fit that brings together two businesses with the same ambition and complementary strengths, and will create an excellent platform for future profitable growth.”
Source: Chaucer plc
Topics Mergers & Acquisitions Carriers USA Excess Surplus Lloyd's
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