Aspen Board Urges Shareholders to Reject Endurance Offer

By Andrew G. Simpson | June 17, 2014

Aspen’s board of directors has unanimously agreed to reject the unsolicited exchange offer from Endurance to acquire all of the outstanding shares of Aspen for a combination of common stock and cash.

The board determined the offer is not in the best interests of Aspen or its shareholders and recommended that Aspen shareholders reject the offer and not tender their shares to Endurance, the company said.

On June 9, Endurance announced it had begun its exchange offer for all of Aspen’s outstanding shares. Under the offer, each person or investment firm holding Aspen common shares would have the right to receive all cash at $49.50 per share; all Endurance common shares; or a combination of cash and Endurance common shares.

Ideally, Endurance wants to capture Aspen with a mix of 40 percent cash and 60 percent Endurance common shares.

The $49.50 per share price was $2 higher than Endurance’s initial offer in April, and both offers were at a premium above Aspen’s closing price of $46.34 as of June 9.

Aspen’s board rejected the April offer as damaging to its own interest, and the company questioned whether any deal as outlined would be financially responsible. Its response to the June 9 offer sends the same message.

Glyn Jones, chairman of the Aspen board of directors, said that the board feels the latest Endurance offer “significantly undervalues Aspen” and a merger with Endurance poses “significant risks.” He said the board agreed that the company can achieve more value for its shareholders by “continuing to execute its strategic business plan.”

Aspen has additional issues with the Endurance offer.

“Beyond the offer’s significant undervaluation of our company, we believe that there is a fundamental strategic mismatch between Aspen and Endurance and that a combination would create significant dis-synergies,” said Jones.

He called the 60 percent stock component of Endurance’s offer “highly unappealing given Endurance’s unattractive business mix, with an over-reliance on the volatile, low-margin and challenged crop insurance business and a dependency on reserve releases to fuel earnings.”

John Charman, Endurance chairman and CEO, has been critical of Aspen’s board and executive leadership for its rejection of his firm’s overtures.

Charman insists that there is individual Aspen shareholder support for the merger.

“We have had positive dialogue with the shareholders of both Aspen and Endurance, and they have indicated overwhelming support,” Charman said during a recent conference call.

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