13 March 2017Insurance

Fairfax increases cash component of $4.9bn Allied World deal

Canada-based property and casualty re/insurer Fairfax Financial, which is set to  acquire Allied World Assurance Company in a $4.9 billion deal, has increased the cash consideration component to $28.00 per share, including $5.00 in special dividend to be paid to Allied World as part of the transaction.

The company said that it has increased the cash consideration component of its offer to Allied World shareholders by $18.00 out of a possible increase of $30.00 per ordinary share.

Fairfax said that it received $1.6 billion of investments by minority co-investors, which includes $1 billion from Omers, and $500 million commitment from Alberta Investment Management Corporation (AIMCo).

The increase will correspondingly reduce the fixed value stock consideration under the terms of the definitive merger agreement.

"We are pleased to be able to increase the cash consideration component of our cash and stock offer of $54.00 per Allied World ordinary share by $18.00," said Prem Watsa, chairman and CEO of Fairfax. "Allied World shareholders will now receive total cash consideration of $28.00 per ordinary share in connection with our transaction and Fairfax will be able to minimize the dilution to Fairfax shareholders, while having the flexibility to buy back the minority investments from OMERS, AIMCo and others over 5-7 years' time.

"We are very grateful for the support we have received from our co-investing partners, including OMERS and AIMCo. Thanks to these co-investing partners, our Fairfax shareholders will be happy to know we will not need to issue approximately 3.5 million Fairfax shares, based on the March 9th closing price of our shares."

Scott Carmilani, president, CEO and chairman of Allied World, said: "We are excited to be able to present Allied World's shareholders with an $18.00 increase in the cash component of Fairfax's offer. By working with Fairfax to provide additional time to increase the cash consideration component of its offer, we were able to maximize the amount of cash our shareholders would receive, making the offer even more attractive."

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More on this story

17 February 2017   Canada-based Fairfax Financial Holdings has announced that it made a net loss of $512.5 million for 2016, down substantially from the $567.7 million net profit it made the year before.
23 March 2017   Switzerland-based Allied World Assurance Company's shareholders have approved the merger transaction with Canada-based property/casualty re/insurer Fairfax Financial Holdings.
28 April 2017   Canada-based property/casualty re/insurer Fairfax Financial Holdings has recorded a profit in the first quarter of 2017 after a loss in the same period a year earlier while in the process of acquiring Allied World Assurance Company.