Alea Group, a Bermuda-based insurer that has been in runoff since late 2005, said Fortress Investment Group plans to go ahead with plans to buy the company, in spite of a shareholder vote not to proceed with a prior form of offer.
On April 4, the board of FIN Acquisition Corporation, a company formed at the direction of private equity funds advised by Fortress Investment Group, had announced its intention to pursue a cash acquisition of Alea Group Holdings (Bermuda) Ltd. that was to be implemented by means of a "statutory amalgamation"–a form of merger allowed under sections 104 to 109 of the Bermuda Companies Act.
The offer price at that time was 93 pence ($1.84) per Alea Share–roughly ?162 million ($320 million)–but FIN later increased the price on May 17 in reaction to another higher offer, to 96.5 pence per share, or about ?168 million ($330 million).
On May 22, FIN Acquisition announced that if the "amalgamation agreement" was not approved at a special shareholders meeting, then it would go forward with the acquisition by means of an offer for all issued shares, conditioned on 50 percent acceptance. At that point, the group already had enough stake in the company–55 percent of the shares–to push the deal forward, it said.
In light of the May 22 announcement, even though shareholders rejected the "amalgamation" yesterday, the deal will proceed, the Alea board said.
In third-quarter 2005, after substantially boosting loss reserves, Alea suffered a series of ratings downgrades which prompted the company to consider strategic alternatives–subsequently selling off renewal rights of parts of the business in pieces and putting the rest into runoff.
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