A Blow-By-Blow Recounting of the Ongoing, Dramatic,
Multi-Party Efforts at a Mega-Deal
By Phil Gusman
On June 12 of this year, New York-based Transatlantic
Holdings Inc. and Swiss-based Allied World
Assurance Co. Holdings
announce a $3.2 billion
merger deal that executives
say will create a global specialty insurer and reinsurer
operating in 18 countries on
six continents.
The new company,
to be called “TransAllied,”
would manage $8.5 billion
in total capital, according
to Robert Orlich, president
and CEO of Transatlantic.
The transaction is
structured as a merger of
equals, with shareholders
of Transatlantic receiving
0.88 Allied World common
shares for each Transatlantic
common share held. Following the
merger, Transatlantic shareholders would own approximately 58
percent of the combined company,
with Allied World shareholders
owning roughly 42 percent.
Roughly one month later,
Bermuda-based Validus Holdings
Ltd. makes an unsolicited compet-
ing $3.5 billion offer to acquire
Transatlantic Holdings Inc. Validus
says its offer is a “superior pro-
posal” that “delivers significantly
higher value to Transatlantic stock-
holders than does the proposed
acquisition of Transatlantic by
Allied World.”
While the Allied World/
Transatlantic deal would make
Transatlantic the senior partner,
the Validus offer would make
Transatlantic a subsidiary.
Later in July, Transatlantic
responds, saying Validus’ offer is
not superior to Allied World’s—
but that it will likely lead to a
superior proposal. Transatlantic
agrees to talk to Validus, but asks
the Bermuda company to sign a
“standstill provision” that Validus
says would effectively stop it from
for breach of fiduciary duty, seeking a declaratory judgment that the
absence of standstill agreement is
not sufficient reason for not considering the company’s offer.
Transatlantic, meanwhile,
sends a letter to shareholders
informing them that it remains
committed to the Allied World
merger.
Transatlantic later says it has
opened discussions and entered
into a confidentiality agreement
with National Indemnity.
Days afterward, Validus con-
tacts Transatlantic shareholders
asking them to vote against the
In the weeks leading up to
a planned vote on the Allied
World proposal, advisory
firm Institutional Shareholder
Services (ISS) recommends that
Transatlantic shareholders vote
against the deal. ISS also recom-
In early august, a new player with a bold-faced name—
warren Buffett—enters the
game, as Berkshire Hathaway’s
national indemnity Co. puts in a
competing bid for Transatlantic.
national indemnity offers to buy
all of Transatlantic’s outstanding
shares for $52 per share, valued
at about $3.25 billion.
pursuing its bid without approval
from the Transatlantic board
“Clearly this is not a
condition that we can
accept.”
Transatlantic urges
its stockholders to reject
Validus’ offer, stating
that it is “based on erro-
neous assumptions that
are not supported by
diligence,” and “includes
meaningful uncertain-
ties.”
Transatlantic also files a federal
lawsuit in Delaware alleging that
Validus has made false and mis-
leading statements to Transatlantic’s
stockholders through tender-offer
materials filed by Validus.
In early August, a new player
with a bold-faced name—Warren
Buffett—enters the game, as
Berkshire Hathaway’s National
Indemnity Co. puts
in a competing bid
for Transatlantic.
National Indemnity
offers to buy all of
Transatlantic’s out-
standing shares for
$52 per share, val-
ued at about $3.25
billion. Ajit Jain,
reinsurance division
president for National
Indemnity, writes to
Transatlantic, “With
your stock trading
at $45.83, I have to
believe that you will
find our offer to buy
all of Transatlantic’s
shares outstanding at
$52 per share to be an
attractive offer.”
Validus’ Noonan
says both its bid and
National Indemnity’s
bid represent superior
offers to Allied World’s.
