NU Online News Service, April 21, 8:50 a.m.EST

In a move that spans the Atlantic, Hanover Insurance Group hasmade an offer to buy London-based Chaucer Holdings for $510million.

The companies say the purchase is expected to close during the third quarter. It is subject to regulatory approvals in theUnited State, United Kingdom, and other jurisdictions, andChaucer’s shareholders need to approve the transaction.

That may not come easily. According to Bloomberg, Pamplona Capital Management,Chaucer’s largest shareholder, says the offer is inadequate and theinvestment firm will not accept it. Other investor groups approve,Chaucer says.

Chaucer’s board of directors consider the terms of theacquisition to be fair and reasonable, and they have recommendedthat shareholders approve the deal, says a press release.

According to rating agency A.M. Best Co., the offer made byHanover takes into account the effect of the Tohoku earthquake andtsunami on Chaucer. It’s “A” rating of Hanover and ratings toChaucer Holdings and its Lloyd’s syndicates are unchanged.

Chaucer on Monday announced losses from Japan could reach about$57 million. It says catastrophe events in 2011 “resulted inlimited ceded reinsurance erosion” and it has plenty of protectionfor future events. Simultaneously, Chaucer confirmed it was intalks with a number of companies interesting in buying it.

Chaucer underwrites global marine, non-marine, aviation, motorvehicle and nuclear business at Lloyd’s.

Frederick H. Eppinger, chief executive officer at Hanover, saysthe purchase “would represent a significant step forward in ourjourney to build a world class property and casualty company,” andallow Hanover to “advance our specialty strategy.”

“Increasingly, many of our partners are seeking carriers thatcan deliver product solutions and risk placement capabilities inhighly specialized markets with growing international exposures,”Eppinger says in a statement. “In addition to earnings and riskdiversification, we would benefit from Chaucer's strong marketposition as one of the lead insurers and managing agents atLloyd's.”

Chaucer CEO Bob Stuchbery says the acquisition will allow it to“Build on Hanover’s market position, and access attractivespecialty business through its strong U.S. retaildistribution.”

A.M. Best says the transaction could result in bettercross-selling opportunities for Hanover and Chaucer.

Hanover says it plans to finance the purchase with cash, and itwill sell about $250 million of debt.