IPC Holdings continues negotiations with Validus, reviews alternatives

By Lisa Kerner

Charlotte, N.C., June 23 - IPC Holdings, Ltd. chairman Kenneth L. Hammond said IPC will continue as a stand-alone company if an agreement with Validus Holdings, Ltd. is not reached in the "very near future."

IPC and Validus have signed a confidentiality agreement, begun mutual due diligence and made data rooms available to each other, according to an IPC news release.

Hammond said in the release that Validus is "not willing to move on the key issue of price."

On Monday, Validus said it made "a number of concessions" in a revised amalgamation proposal delivered to IPC based on the company's stated concerns.

The concessions include allowing IPC's board to perform a limited market check after the signing of an agreement with Validus, eliminating the book value termination right so that the closing will not be affected by catastrophe risk and agreeing to an enhanced severance plan for IPC employees, Validus said.

Validus offered to acquire IPC for $3.75 in cash and 1.1234 Validus voting common shares for each IPC common share for a total consideration of $27.26 per IPC share based on Validus' closing price on Monday.

Validus' exchange offer for IPC shares ends at 5 p.m. ET on Friday.

Alternative plans

According to IPC, in conjunction with its board of directors, it also has:

• Reached out to other parties to solicit interest in a possible transaction and has engaged in negotiations with other parties;

• Reached out to a number of its shareholders to hear their views on maximizing value; and

• Determined that it will continue its review of strategic alternatives after the hurricane season if an appropriate transaction cannot be reached in the near future.

"We believe a comprehensive review of all alternatives for value maximization post-hurricane season would allow for a greater number of potential interested parties as well as greater certainty of value and timing of closing a deal," Hammond said in the release.

As reported previously, Validus said that while it believes that reaching a consensual amalgamation transaction is in the best interests of IPC and its shareholders, Validus will continue to pursue alternative paths to complete a transaction, including its exchange offer and scheme of arrangement.

Validus also said it will proceed with its plan to replace the IPC board at a special meeting of IPC shareholders.

Max Capital Group Ltd. terminated its merger agreement with IPC after a majority of IPC's shareholders voted against the deal. Max's stockholders voted in favor of an amalgamation with IPC.

The companies had agreed to combine in a stock-for-stock transaction valued at approximately $912 million.

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.

Mentioned in this article:

IPC Holdings, Ltd. Nasdaq: IPCR

Max Capital Group Ltd. Nasdaq: MXGL

Validus Holdings, Ltd. NYSE: VR

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