The Bermuda-based Catlin Group has published its acceptance of terms upon which XL Group plc will acquire Catlin in a “cash and share acquisition of the entire issued and to be issued share capital of Catlin by XL.” The announcement confirms the takeover first announced in December.
The bulletin said the acquisition is intended to be “effected by means of a two-step, integrated process comprising a scheme of arrangement under Section 99 of the Bermuda Companies Act followed immediately by a merger under Section 104H of the Bermuda Companies Act.”
Under the plan Catlin shareholders would receive 388 pence [app. $5.88] in cash and 0.130 new XL Shares, as well as the “expected 2014 Final Dividend payable by Catlin of 22 pence [app. $0.34] in cash to Catlin Shareholders on the relevant record date.”
The announcement also explained: “Based on the Closing Price of $35.42 per XL Share and the exchange rate of $1.5084:£1 on 8 January 2015 (being the latest practicable date prior to the date of this announcement), the Acquisition (together with the expected 2014 Final Dividend but excluding the ITB Special Dividend referred to below) values each Catlin Share at approximately 715.3 pence [$10.79] and the entire issued and to be issued share capital of Catlin at approximately £2.79 billion [$4.2084 billion].”
The acquisition is conditioned on receiving shareholder approval and the satisfaction of regulatory conditions. Catlin’s advisors, J.P. Morgan Cazenove and Evercore, have said that they “consider the terms of the Acquisition to be fair and reasonable,” and Catlin’s directors have unanimously approved the deal.
In addition the announcement said: “XL’s legal name will remain XL Group plc following its acquisition of Catlin; however, it will operate under the ‘XL Catlin’ trade name.
“Following the Acquisition, Mike McGavick will be Chief Executive Officer, Stephen Catlin will be Executive Deputy Chairman, Peter Porrino will be Chief Financial Officer, Greg Hendrick will serve as Chief Executive of Reinsurance, Paul Brand will serve as Chair of the Insurance Leadership Team and Chief Underwriting Officer Insurance and Kelly Lyles will serve as Deputy Chair, Insurance Leadership Team and Chief Regional Officer, Insurance.
“The current members of XL Group plc’s Board will remain as directors of XL Group plc following the Acquisition. In addition, it is expected that Mr. Catlin, along with an additional Catlin director who meets applicable independence qualifications and other criteria, will join the XL Group plc Board following the Acquisition.”
McGavick commented: “”We are delighted to announce this compelling combination which positions us strongly to provide more – and even better – answers for the world’s most complex risks while enhancing our opportunities to create value for shareholders and better serve clients and brokers.
“We believe the transaction will accelerate each company’s strategy, and address the meaningful structural changes we see shaping the P&C sector. Specifically, the combination will add immediate scale in specialty insurance, it will create a more efficient and more capable global network by bringing our two infrastructures together, and it creates a top 10 reinsurer with expanded alternative capital capabilities.”
Stephen Catlin described XL as a “compelling partner for the Catlin business.” He added that “both businesses have been built on underwriting excellence and benefit from strong cultural compatibility. Together, the combined entity will be a market leading global specialty and property catastrophe insurer which will be far better positioned to respond to the changing dynamics that are impacting the broader insurance and reinsurance markets.
“We expect the enlarged business to benefit from increased diversification, significant further economies of scale, strengthened franchises in each of its markets and an improved standing with intermediaries. As a result, XL Catlin will be better equipped to serve its clients across a range of distribution channels and geographies with an enhanced suite of capabilities and products.
“We believe that this transaction represents an excellent outcome for our shareholders, clients and employees.”
Source: Catlin Group
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