22 April 2014 Insurance

Aspen-Endurance battle turns increasingly ugly

The increasingly acrimonious battle between Endurance Specialty and Aspen Insurance – sparked by an unsolicited $3.2 billion bid for Aspen by Endurance – took a new twist late last week when Aspen moved to block the bid through a shareholders’ rights plan, which Endurance described as a “poison pill”.

The plan means that each Aspen shareholder as of April 28, 2014, has the right to purchase one preferred share per ordinary share in the instance where a person or group acquires beneficial ownership of 10 percent or more of Aspen’s ordinary shares (15 percent in the case of a passive institutional investor).

In practical terms, the move means that Aspen’s shareholders (excluding the person or group members acquiring such beneficial ownership) can acquire the company’s ordinary shares at a discounted price, thereby stymieing any move by a third party to seize control of the company.

In Aspen’s words, the plan is “designed to deter abusive tactics from being used in a proposed takeover, to ensure that shareholders receive fair and equal treatment in any proposed takeover of the company and to provide that any transaction would appropriately reward our shareholders and be beneficial to our company.”

But Endurance responded to the move by Aspen with fury, describing the plan as a “poison pill” ploy designed to deny Aspen’s shareholders value for money and accusing Aspen’s board of having distain for the company’s shareholders.

“At a time when the Aspen board should be seriously considering an opportunity to deliver significant value to its shareholders, it is instead focused on blocking them from receiving that value and on taking actions to entrench themselves,” said Michael McGuire, chief financial officer of Endurance.

“This is not a surprise given the lack of alignment and clear disdain Aspen's board has shown for its shareholders in summarily rejecting our proposal without any discussion whatsoever.

“A poison pill is a well-documented defensive step typically taken by an entrenched board of directors. It is interesting Aspen's board adopted a poison pill that divides their shareholders into different categories – good and bad, passive and active – a division that is currently the subject of litigation in an unrelated situation.

“As if it weren't clear before, Aspen shareholders now have further evidence of their board's deliberate actions to prevent them from receiving attractive value for a strategically sound acquisition. We remain fully committed to delivering our highly attractive premium offer to Aspen shareholders.”

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