Aspen Insurance Holdings’ board of directors unanimously rejected Endurance Specialty Holdings’ exchange offer, commenced June 9, of $49.50 per Aspen common share.
A story in Bloomberg, written by Dan Kraut, puts the value of Endurance’s hostile bid at $3.2 billion.
Glyn Jones, chairman of Aspen’s board, says in a statement, “The Aspen board of directors is unanimous in its belief that the Endurance offer significantly undervalues Aspen and fails to reflect the value of our business and strong future prospects. We are highly confident that Aspen can achieve more value for its shareholders—and without the significant risks that are inherent in a merger with Endurance—by continuing to execute its strategic business plan.”
The Endurance exchange offer expires Aug. 29. Endurance says the exchange offer is in connection with its increased June 2 proposal, which raised its offer from $47.50 per Aspen common share to $49.50. Under the exchange offer, Endurance says “each holder of Aspen common shares will have the right to receive for their Aspen common shares, at their election: all cash, $49.50 for each Aspen share; all Endurance common shares, 0.9197 Endurance shares for each Aspen share; or a combination of cash and Endurance common shares (0.5518 Endurance common shares and $19.80 in cash for each Aspen share.”
Also on June 2, Endurance, through a filing with the SEC, pushed to convene a special general meeting where Aspen’s common shareholders would consider increasing the size of Aspen’s board from 12 to 19 members, resulting in a majority of the current directors standing for election at Aspen’s 2015 annual general meeting.
Endurance further pushed for a court-ordered meeting of Aspen shareholders “at which Aspen common shareholders would vote to approve a Scheme of Arrangement under Bermuda law pursuant to which Endurance would acquire all of Aspen’s outstanding common shares on financial terms no less favorable than those contained in its increased proposal.”
Aspen’s board did not budge in its latest vote, however. Jones adds, “Beyond the [Endurance] offer’s significant undervaluation of our company, we believe that there is a fundamental strategic mismatch between Aspen and Endurance and that a combination would create significant dis-synergies.
“Additionally, the 60% stock component of Endurance’s offer is highly unappealing given Endurance’s unattractive business mix, with an over-reliance on the volatile, low-margin and challenged crop-insurance business and a dependency on reserve releases to fuel earnings.
“We urge shareholders not to tender their shares into Endurance’s offer.”
For his part, Endurance Chairman and CEO John R. Charman, in a statement today, accuses the Aspen board and management of misleading shareholders in pursuit of an “entrenchment agenda.”
Charman says, “We know from our extensive engagement with Aspen shareholders that many have been frustrated by the dismissive and entrenched response of Aspen’s board and management to the significant opportunity for value creation that Endurance has proposed.”
He adds, “Despite the heated rhetoric Aspen has directed at Endurance, Aspen’s board and management have presented no credible plan to deliver value that can compete with what we are offering,” and also says, “What Aspen’s board and management have failed to achieve for 10 years, we are prepared to deliver today.”
Charman concludes, “We urge Aspen shareholders to speak forcefully by supporting our two shareholder proposals” of expanding the board and the court-sanctioned scheme of arrangement.
Aspen’s Jones, meanwhile, labels Endurance’s two shareholder proposals as “part and parcel of its desperate attempts to force through an inadequate offer for Aspen.” He adds, “We strongly urge shareholders not to support Endurance’s pursuit of an involuntary scheme of arrangement.”
The Aspen board further charges that “Endurance touts a ‘headline price’ that simply does not exist.” The board says the public statements of a $49.50 per-share offer is off base because “the stock component of the offer consideration is currently—and has since announcement of its [initial] offer on April 14 been—worth less than that headline price.”
Aspen also contends that Endurance has engaged in “coercive legal tactics” in an attempt to acquire the insurer at the lowest possible price.
Endurance calls Aspen’s charges “misguided.”