Validus Ends Transatlantic Takeover Bid

November 28, 2011

Reinsurer Validus Holdings Monday withdrew its offer for peer Transatlantic Holdings, ending a months-long hostile takeover battle.

Validus, which has a history of hostile bids for other reinsurers, launched its offer in July, attempting to break up a deal Transatlantic already had with Allied World Assurance Co Holdings Ltd.

While it succeeded in that effort — Transatlantic and Allied called off their deal in September — Validus was ultimately unable to woo Transatlantic’s management or its shareholders.

In a filing with the U.S. Securities and Exchange Commission, Validus said it would return about 7.7 million Transatlantic shares, representing a 13.4 percent stake in the company, tendered in the offer to the shareholders.

In the filing, Validus said certain condition to its tender offer, which expired on Nov. 25, were not satisfied. The filing did not say what Validus intended to do about its lawsuits against Transatlantic or its consent solicitation to replace the company’s board.

Last week, Transatlantic’s board, which had repeatedly rebuffed Validus, accepted a $3.4 billion stock and cash deal from property and casualty insurer Alleghany Corp .

While the Validus offer was actually worth more than the Alleghany bid on paper, the breakup fee in the Alleghany deal all but wiped out Validus’s financial advantage.

Had Validus succeeded, it would have been the second time in two years it won a hostile bid for a peer, after snapping up reinsurer IPC in 2009.

Validus shares rose 2.1 percent to $29.40 in early trade. Prior to Monday’s open, the stock had been down 6.6 percent from mid-July, when it first bid for Transatlantic.

At one time following the bid the stock had lost as much as a quarter of its value, but it has rebounded steadily since late September.

(Reporting by Jochelle Mendonca in Bangalore and Ben Berkowitz in New York; Editing by Supriya Kurane, Dave Zimmerman)

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