Max Capital, Validus at odds over value of IPC Holdings

By Lisa Kerner

Charlotte, N.C., April 6 - Max Capital Group Ltd. denies that it incorrectly calculated diluted book value per IPC Holdings Ltd. share and diluted tangible book value per IPC share in an April 2 letter to IPC.

Validus Holdings Ltd. said Max incorrectly stated that an IPC/Max combination delivers 29% more tangible book value per share to IPC.

According to Validus, Max "made a substantial error in its calculation of pro forma tangible book value under the terms of Validus' proposed plan of amalgamation with IPC."

In an April 5 letter to IPC, Validus said the measure of tangible book value is the "wrong framework" to analyze which deal is superior.

As previously reported, Max and IPC 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 offered to acquire IPC in a share-for-share exchange that values IPC shares at $29.98.

Each IPC common share would be exchanged for 1.2037 Validus common shares, according to a March 31 letter from Validus to IPC's board of directors.

According to Max, its calculations represent what an IPC shareholder would receive on a stand-alone basis without giving effect to what IPC contributes to a transaction.

Max said Validus is using "the additional benefit derived from issuing Validus' shares to purchase IPC at a discount to book value."

"Since Validus initially made its below book value, unsolicited takeover offer for IPC, it has demonstrated a lack of understanding of what is important to the shareholders of IPC in allowing them to assess the relative value being delivered by Max versus Validus," Max chairman and chief executive officer Marty Becker said in a April 6 news release.

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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