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Validus withdraws Transatlantic bid

by Lou Whiteman | Published November 28, 2011 at 10:06 AM

Validus Holdings Ltd. on Monday, Nov. 28, withdrew its offer to acquire Transatlantic Holdings Inc., clearing the way for Alleghany Corp. to purchase the reinsurer for $3.4 billion after an eight-month takeover battle.

Bermuda-based Validus in a Securities and Exchange Commission filing said conditions of its offer were not satisfied, adding that it would return the 7.7 million Transatlantic shares, about 13.4% of the float, that were tendered by shareholders.

The fate of New York-based Transatlantic has been uncertain since June, when its shareholders rejected a $3.19 billion offer from Allied World Assurance Co. Holdings Inc. The company in the months since has rejected overtures from both Validus and Berkshire Hathaway Inc., with Validus also initiating a campaign to oust Transatlantic's board.

The Alleghany deal offered $59.79 per share, a premium to Validus' $54 per share offer. Alleghany's offer also has the backing of Davis Selected Advisers LP, Transatlantic's largest shareholder and an opponent of the Allied transaction. Davis holds 24% of Transatlantic but has regulatory restrictions on how it votes shares in excess of 9.9%.

Alleghany in announcing its offer last week said it has known Transatlantic, once a unit of American International Group Inc., for a number of years, has increased confidence in its underwriting subsequent to due diligence and that the company is under-appreciated by many.

The buyer said the deal would create a reinsurance giant with combined net premiums of more than $4.7 billion and total capital of $7.2 billion.

"This transaction is an outstanding opportunity to create significant value for Alleghany and Transatlantic stockholders alike, as the unique and complementary strengths of our leading specialty insurance and reinsurance platforms provide all the ingredients necessary for superior performance," Alleghany CEO Weston M. Hicks said in a statement.

Shares of Transatlantic opened up less than 1%, or 43 cents, at $53.80. Alleghany shares traded up 1.5%, or $4.35, to $281.50.

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Validus withdraws Transatlantic bid

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