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Validus asks court to reduce termination fee in IPC, Max Capital deal
By Lisa Kerner
Charlotte, N.C., April 29 - Validus Holdings, Ltd. filed suit in the Supreme Court of Bermuda against IPC Holdings, Ltd., IPC Ltd. and Max Capital Group Ltd.
The lawsuit challenges the $50 million termination fee and "no-talk" provision in the March 5 amended agreement and plan of amalgamation between IPC and Max.
Validus said it will ask the court for an injunction to restrain payment of the termination fee and to restrain operation of the no-talk provision.
According to Validus, the fee is excessive and "amounts to an unlawful penalty under Bermuda law and is accordingly unenforceable," and allowing the no-talk provision to be included in the agreement constituted a breach of the Max directors' fiduciary duties.
Validus would like the amount by which the termination fee is eliminated or reduced to be paid to IPC shareholders as a dividend.
The offers
IPC and Max agreed to combine in a stock-for-stock transaction valued at approximately $912 million. Max shareholders will receive 0.6429 IPC shares for each Max share.
Validus believes its March 31 offer to acquire IPC is superior and is soliciting IPC votes against the deal with Max.
In the Validus offer, IPC shareholders would receive 1.2037 Validus common shares for each IPC share. The share-for-share exchange values IPC shares at $29.98.
As previously reported, IPC and Max said they expect the transaction to close in June, subject to approval by shareholders of both companies.
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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