XL Confirm “Preliminary Discussions” With Catlin
Following reports they made a $3.9 billion offer to buy Catlin Group, XL Group today [Dec 17] confirmed that it is “engaged in preliminary discussions with Catlin regarding a potential transaction to acquire the company and form a combined entity.”
Bloomberg reported that Catlin Group Ltd. said it received a takeover approach from XL valued at about 2.5 billion pounds [$3.9 billion].
“Under the terms, XL would buy Catlin for 410 pence in cash and 0.130 XL share for each Catlin common share, the Bermuda-based insurer said in a statement today,” the Bloomberg report said.
“Based on XL’s closing price yesterday, the offer values each Catlin share at 699 pence apiece. The stock jumped as much as 14 percent at 13:33 p.m. in London, the biggest advance since 2004.”
XL CEO Mike McGavick commented: “Both XL and Catlin – respected, innovative, global P&C firms – are well positioned on their own. However, we both believe that we will be far better positioned and stronger together. We see this transaction as deeply accelerating the strategies of both companies.
“Specifically, the combined entity would be a leader in the global specialty and property cat markets and would make greater and more efficient use of both companies’ global networks and infrastructure.
“As Catlin is the leading presence at Lloyd’s, the combination would immediately expand many of the lines of business in which XL has recently invested.
“In the increasingly competitive reinsurance market, the combined company would be a top 10 player, thereby increasing alternative capital opportunities and overall relevance to clients and brokers.
“The proposed transaction is expected to result in attractive economics starting in the first year and long-term value for shareholders.
“For these reasons, and crucially, for the deep cultural and strategic alignment we see between XL and Catlin, with both built on disciplined underwriting, we see meaningful opportunity in this transaction,” added Mr McGavick.
XL said, “The transaction would require approval by the Boards of Directors of each company and would be subject to various shareholder and regulatory approvals and completion of diligence.
“There can be no assurance that a transaction will result from these discussions, nor can there be any certainty as to the terms on which any such transaction might proceed.”
XL added they do “not intend to comment further at this stage and any further statements will be made if and when appropriate.”
These talks follow after RenaissanceRe’s recently announcement that it will acquire Platinum in a deal worth approximately $1.9 billion, and according to Fitch Ratings the transaction between the two Bermuda-based re/insurers “could spur merger and acquisition activity among reinsurers.”
Looks like more PLP-created jobless on the way…
This is a transaction between Multi billion dollar companies for the benefit of their shareholders.
The PLP and OBA don’t factor into this at all. A stronger company is on balance better for Bermuda.