Aspen Adopts Shareholder Rights Plan; Endurance Slams ‘Poison Pill’ Defense

April 21, 2014

The 17th April of April saw a resumption of hostilities between Aspen Insurance Holdings and its would-be acquirer Endurance Specialty Holdings. The two Bermuda-based specialty insurers have fighting each other since April 14, when Endurance offered to buy Aspen for $3.2 billion, or $47.50 per Aspen share, in a hostile takeover.

A week later Aspen announced that its “board of directors has adopted a shareholders rights plan and resolved to issue one preferred share purchase right on each share of the Company’s ordinary shares issued and outstanding at the close of business on April 28, 2014. The rights plan expires on April 16, 2015, and the board of directors may terminate the rights plan at any time if it no longer believes that the rights plan is in the best interests of the company and its shareholders.”

Unless Aspen further modifies the plan, it will be triggered “if a person or group acquires beneficial ownership of 10 percent or more of Aspen’s ordinary shares (15 percent in the case of a passive institutional investor).

In that case current shareholders would be able to exercise their rights to acquire additional shares at a discounted price. Significantly, however, the rights offering excludes “the person or group members acquiring such beneficial ownership.”

Although Aspen said it had adopted the plan was “designed to deter abusive tactics from being used in a proposed takeover,” as well as other reasons, it brought a predictable response from Endurance as a “poison pill,” designed to thwart its takeover offer.

Endurance CFO Michael J. McGuire said: “At a time when the Aspen board should be seriously considering an opportunity to deliver significant value to its shareholders, it is instead focused on blocking them from receiving that value and on taking actions to entrench themselves. This is not a surprise given the lack of alignment and clear disdain Aspen’s Board has shown for its shareholders in summarily rejecting our proposal without any discussion whatsoever.”

Endurance also explained that a “poison pill is a well-documented defensive step typically taken by an entrenched board of directors. It’s interesting Aspen’s Board adopted a poison pill that divides their shareholders into different categories – good and bad, passive and active – a division that is currently the subject of litigation in an unrelated situation.

“As if it weren’t clear before, Aspen shareholders now have further evidence of their Board’s deliberate actions to prevent them from receiving attractive value for a strategically sound acquisition. We remain fully committed to delivering our highly attractive premium offer to Aspen shareholders,” he concluded.

Sources: Aspen Insurance Holdings and Endurance Specialty Holdings

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