Endurance Comment On Aspen’s “Poison Pill”

April 17, 2014

A few days after rejecting a $3.2 billion takeover proposal from a fellow Bermuda-based re/insurer, Aspen Insurance Holdings Ltd said they adopted a shareholders rights plan which is “designed to deter abusive tactics from being used in a proposed takeover.”

They resolved to issue one preferred share purchase right on each share of the Company’s ordinary shares issued and outstanding at the close of business on April 28, 2014.

The Company said, “The Rights Plan expires on April 16, 2015, and the Board of Directors may terminate the Rights Plan at any time if it no longer believes that the Rights Plan is in the best interests of the Company and its shareholders.

“In the absence of further action by the Board of Directors and subject to certain exceptions, if a person or group acquires beneficial ownership of 10% or more of Aspen’s ordinary shares [15% in the case of a passive institutional investor], the rights generally will become exercisable and allow holders [other than the person or group members acquiring such beneficial ownership] to acquire the Company’s ordinary shares at a discounted price.

“In addition, at any time after a person or group acquires 10% or more of Aspen’s ordinary shares [15% in the case of a passive institutional investor], the Board of Directors may determine to exchange one Aspen ordinary share for each outstanding right [other than rights owned by such acquiring person or group members, which would become void].

“The Rights 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.

Aspen recently rejected a $3.2 billion takeover proposal from Endurance Specialty Holdings Ltd., and following this statement Endurance said that a “poison pill is a well documented defensive step typically taken by an entrenched board of directors.”

Michael J. McGuire, Chief Financial Officer of Endurance, said: “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.

“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’s 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,” Mr. McGuire concluded.

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