Aspen Insurance’s board of directors has again officially rejected Endurance’s bid to buy the business urging its shareholders to reject the involuntary scheme of arrangement Endurance is now pursuing describing the tactic as a “desperate attempt to force through an inadequate offer for the business”.
Endurance has responded in kind, however, calling the response of Aspen’s board “combative” and urging Aspen’s shareholders to come to the negotiating table, and to hold the Aspen board accountable for its actions (see separate story).
Endurance first made its $3.2 billion bid for the company earlier this year. Since then, an increasingly bitter war of words has developed between the two companies with Aspen’s board repeatedly rebuffing the advances but Endurance seeking to force through the proposal.
On June 9, 2014, Endurance commenced an exchange offer for all of the outstanding Aspen common shares for $49.50 per share in cash and Endurance common shares. It also initiated legal moves to use an involuntary scheme of arrangement to force a meeting of Aspen shareholders at which they would vote on the offer.
But Aspen’s board has again issued a robust counterattack listing in a detailed statement eight reasons it believes the offer is not in its shareholders’ best interests and publishing a presentation outlining its own strategy for growth and boosting shareholder value.
Glyn Jones, chairman of the Aspen board of directors, said, "The Aspen board of directors is unanimous in its belief that the Endurance offer significantly undervalues Aspen and fails to reflect the value of our business and strong future prospects. We are highly confident that Aspen can achieve more value for its shareholders – and without the significant risks that are inherent in a merger with Endurance – by continuing to execute its strategic business plan.
"Beyond the offer's significant undervaluation of our company, we believe that there is a fundamental strategic mismatch between Aspen and Endurance and that a combination would create significant dis-synergies. Additionally, the 60 percent stock component of Endurance's offer is highly unappealing given Endurance's unattractive business mix, with an overreliance on the volatile, low-margin and challenged crop insurance business and a dependency on reserve releases to fuel earnings. We urge shareholders not to tender their shares into Endurance's offer.”
Among eight reasons the board’s statement goes onto outline for rejecting the offer, it claims: that while Aspen's business has strengthened, Endurance's offer has become even less attractive; that the offer fails to disclose material information with respect to Endurance's financing; that Endurance's coercive legal tactics are an attempt to acquire Aspen at the lowest possible price and will result in significant time, expense and distraction to Aspen while the proposal to increase the size of Aspen's board to 19 would create an unwieldy and untenable corporate governance structure; and that the offer is replete with uncertainties and onerous conditions.
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Aspen, Endurance, North America, Glyn Jones