Fairfax Financial To Buy Allied World For $4.9B

December 20, 2016

Fairfax Financial Holdings Limited and Allied World Assurance Company Holdings have entered into a merger agreement in which Fairfax will acquire all of the outstanding registered ordinary shares of Allied World.

Under the terms of the Agreement, based on Friday’s closing stock price on the TSX for Fairfax of C$614.45[$460.65], Allied World shareholders would receive a combination of Fairfax subordinate voting shares and cash equal to $54.00 per Allied World Share, for a total equity value of approximately $4.9 billion.

The $54.00 per share offer price represents a premium of 18% to the closing price of $45.77 per Allied World Share on December 16, 2016, being the last business day prior to this announcement. The transaction has been unanimously approved by the boards of directors of both companies.

“We are excited to have Allied World join the Fairfax group,” said Prem Watsa, Chairman and CEO of Fairfax. “Allied World is a high-quality company with an excellent long-term track record and an outstanding management team led by Scott Carmilani.

“Allied World will operate within the Fairfax group on a decentralized basis after closing, and we are looking forward to supporting Scott and the entire team at Allied World in growing their business over the long-term.”

“This is a tremendous opportunity for Allied World,” said Scott Carmilani, President, CEO and Chairman of Allied World. “Our shareholders are being rewarded for the strong performance of Allied World over the last 10 years since going public.

“We are strategically aligning ourselves with Fairfax, one of the premier companies in the insurance industry which has a great track record of supporting their operating companies and creating value for shareholders.

“We are excited to be joining the Fairfax organization – we share their passion for underwriting excellence and their entrepreneurial approach to growing the business with a long-term orientation. Our shareholders will benefit from Fairfax’s tremendous investment capabilities as demonstrated by its superior long-term investment track record.

“The success of Fairfax’s decentralized approach in empowering their management teams to drive profitable underwriting and combining Fairfax’s investment philosophy will position us to create long-term value for shareholders.

“Fairfax provides a great home for Allied World to continue to build a strong business for our customers, business partners and employees.”

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