Validus Hit With Transatlantic Lawsuit
Bermuda’s Validus Holdings was yesterday [Nov.8] accused of illegally bolstering its hostile takeover bid of insurer Transatlantic by attempting to change the size of the US firm’s board of directors.
In a lawsuit filed in Delaware Chancery Court, Transatlantic said Validus is violating both Transatlantic’s charter and Delaware state law by offering a consent solicitation that, if approved, would give Transatlantic shareholders the right to set the number of directors on Transatlantic’s board.
Under Transatlantic’s bylaws, only its directors can change the size of its board, according to the complaint. Delaware law prohibits the adoption of bylaws inconsistent with a company’s charter, the complaint said.
If approved, Validus’ consent solicitation would “cause severe disruptions to Transatlantic’s business by creating great uncertainty over the size and composition of Transatlantic’s board, leaving Transatlantic with a board of directors incapable of taking action due to an inability to reach a quorum at precisely the time when a properly-constituted board is most needed: as Transatlantic considers potential acquisition or merger proposals, including a proposal from Validus itself,” the lawsuit said.
The solicitation also seeks shareholder approval to remove the seven incumbent Transatlantic directors and elect three nominees put forward by Validus. The size of the board would then be set at the number of Validus nominees elected and Transatlantic directors who are not removed following the shareholder vote, according to the lawsuit.
“We believe that this lawsuit is yet another attempt by Transatlantic to frustrate the ability of its stockholders to accept Validus’ compelling offer,” a Validus spokesman said.
Earlier this month Validus offered to buy out Transatlantic in a deal worth around $55.35 per share, including an up to $2 per share cash dividend that would decrease if Transatlantic used funds to buy back its shares. The deal values the Bermuda-based company at nearly $3.5 billion.
In a letter to Transatlantic, Validus CEO Edward Noonan [pictured] said he was looking to replace Transatlantic board with three independent directors.
On November 8, Transatlantic called Validus’ offer “inadequate” and said it was continuing to pursue discussions about a potential sale to two other parties.
Earlier this week Validus said its offer provides “compelling and full and fair value” to Transatlantic shareholders.
Hamilton-based Validus Holdings, Ltd. is a provider of reinsurance and insurance, conducting its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. and Talbot Holdings Ltd.
Validus Re is a Bermuda based reinsurer focused on short-tail lines of reinsurance. Talbot is the Bermuda parent of the specialty insurance group primarily operating within the Lloyd’s insurance market through Syndicate 1183.
Serves them right. They should have never tried to cut Allied World Assurance throat. lol