By Lisa Kerner
Charlotte, N.C., March 2 - IPC Holdings, Ltd. and Max Capital Group Ltd. agreed to combine in a stock-for-stock transaction valued at approximately $912 million, it was announced on Monday.
Max shareholders will receive 0.6429 IPC shares for each Max share.
Each company's board of directors has unanimously approved the transaction, which is expected to close in the third quarter of 2009.
The merger agreement includes termination rights for both companies including payment of a $50 million termination fee, according to a form 8-K filed with the Securities and Exchange Commission.
Once the merger is complete, IPC shareholders will own approximately 58% of the combined company on a fully diluted basis and Max shareholders will own approximately 42%, according to a joint news release from the companies.
The combined company will operate under the name Max Capital Group Ltd. It will be the Bermuda-based holding company for the existing global specialty insurance and reinsurance operating subsidiaries of Max and for IPCRe Ltd., the existing Bermuda-based property-catastrophe reinsurance subsidiary of IPC that will be renamed Max IPC Re Ltd.
Max chairman and chief executive officer W. Marston (Marty) Becker will lead the combined company.
James P. Bryce, president and CEO of IPC, will retire on June 30 but will continue in non-executive role as chairman of Max IPC Re.
"From a financial perspective, based on results at Dec. 31, 2008, this transaction creates a stronger capitalized company, with shareholders' equity of over $3 billion and total assets of approximately $10 billion," Becker and Bryce said in the release.
"We expect that the combined entity will have less volatile underwriting results than either of its individual components, as well as more flexibility to efficiently manage capital."
The board of directors of the combined company will have 12 directors - six current independent directors of IPC and six directors from Max, including Becker, said the companies.
Kenneth L. Hammond, the non-executive chairman of IPC's board, will become the non-executive chairman of the combined company's board.
J.P. Morgan Securities Inc. advised IPC and provided a fairness opinion.
Merrill Lynch & Co. and Aon Benfield Securities, Inc. advised Max.
IPC, located in Pembroke, Bermuda, provides property catastrophe reinsurance as well as aviation, property-per-risk excess and other short-tail reinsurance.
Specialty insurance and reinsurance provider Max is based in Hamilton, Bermuda.
| Acquirer: | IPC Holdings, Ltd.
|
| Target: | Max Capital Group Ltd.
|
| Announcement date: | March 2
|
| Transaction total: | $912 million
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| Price per share: | 0.6429 shares of IPC
|
| Termination fee: | $50 million
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| Expected closing: | Third quarter of 2009
|
| Stock price of acquirer: | Nasdaq: IPCR: $25.41 on Feb. 27
|
| Stock price of target: | Nasdaq: MXGL: $16.50 on Feb. 27
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