IPC Holdings says no to Validus' revised offer in favor of Max deal

By Lisa Kerner

Charlotte, N.C., June 9 - IPC Holdings, Ltd. announced that its board of directors has rejected Validus Holdings, Ltd.'s latest proposal.

Validus increased the cash portion of its offer by $0.75 to $3.75 per share on Monday. IPC shareholders would also receive 1.1234 Validus voting common shares under the offer.

According to IPC, Validus' latest offer "continues to be at a significant discount to IPC's book value" and does not constitute a superior proposal under its amalgamation agreement with Max Capital Group Ltd.

IPC chairman Kenneth L. Hammond said even if IPC proceeded with Validus on a friendly basis, a combination of the two companies could not be completed until mid-August.

"Even that very optimistic timing puts us well into hurricane season and if there is a major catastrophe event Validus could walk away from whatever is on the table and there could be no deal with any other party," Hammond said in a company news release.

As previously reported, IPC rejected Validus' offer to acquire IPC for $3.00 in cash and 1.1234 Validus voting common shares for each IPC common share.

Despite the rejection, Validus began an exchange offer for IPC shares. The offer ends at 5 p.m. ET on June 26.

IPC's board urged shareholders not to tender their shares in the Validus exchange offer and to vote for all proposals associated with the Max transaction on the white proxy card at the company's annual meeting, which is scheduled for Friday.

Max and IPC agreed to combine in a stock-for-stock transaction valued at approximately $912 million. As previously reported, Max shareholders will receive 0.6429 IPC shares for each Max share.

Last week, IPC and Max amended their agreement to include the payment of two special cash dividends totaling $2.50 per share in cash to IPC shareholders if the IPC/Max deal closes.

The first dividend of $1.50 per share in cash will be payable to IPC shareholders of record as of June 15.

Shareholders of the combined company will receive $1.00 per share in cash once the transaction is complete.

Based in Hamilton, Bermuda, Validus provides insurance coverage and reinsurance coverage in the property, marine and specialty lines markets.

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.

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